Importance of Employee Background Checks

If you own your own business, you have a duty to your company and your employees to conduct background checks before you hire new people. Conducting background screening is quickly becoming standard practice in many workplaces and businesses – even all across the world. Every type of organization is mitigating their risk by conducting a background check – so why not you? Consider these troubling statistics:

  • According to the Society for Human Resource Management, 50 percent of resumes and applications submitted contain false information.
  • The U.S. Department of Commerce states that 33 percent of all business failures are due to employee theft.
  • According to the Department of Justice, 18 percent of all violent crimes occur in the workplace.
  • 66 percent of negligent hiring trials result in jury awards that average $600,000.

These are not imaginary risks – rather, they are real and happening every day. And these are statistics in the U.S. Hiring the wrong employees can cost your business money, damage your reputation, and possibly open you up to lawsuits.
Furthermore, many small businesses are opened by licensed professionals – doctors, attorneys, veterinarians, etc. They run the added risk of not only have an unchecked employee harming their business directly; rather, they also run the risk of them harming their patients, clients, and consumers. And this in-turn leads to double exposure, as any claim against the employee could also lead to a potential claim to a licensing agency down the road.
Here are several other reasons for a competent background check:

  • Protecting assets – the people you hire potentially have access to property of great value, from physical assets to valuable information. Background screening can help minimize the possibility of theft, trade secret theft, or corporate espionage and subterfuge. You also may be required by law to screen for individuals with particular disqualifying characteristics for the position (i.e. criminal history, access to weapons, etc.). Finally, it helps protect your most valuable asset – your present employees.
  • Helping promote safety – background screening helps minimize the possibility of violence at your workplace or campus by checking for past criminal behavior and better clarifying the history and character of prospective employees, vendor personnel, and/or academic program applicants. The failure to conduct the research could lead to a claim negligent hiring down the road.
  • Hiring the best employees or selecting the ideal applicants – background screening helps establish that candidates are qualified for the positions for which they’ve applied. It can also weed out any candidates that were dishonest in their résumés or CVs, helping you bring in trustworthy individuals.
  • Avoiding a revolving door – recruiting and on-boarding can be expensive processes. By screening your employees, you can help ensure that individuals are properly qualified and can thus reduce turnover. Reference checks can also lead you to uncover potential costly “red flags” like histories of absenteeism or poor work performance.
  • Maintaining a good reputation – you need to take every step to ensure that a hiring mistake doesn’t turn into a public relations disaster. Just one employee who wasn’t qualified or had a criminal history can tarnish a carefully built reputation. Background screening helps protect your organization’s good name.

A competent employee background check should look at several types of information. A thorough background screening should cover a criminal history check, Social Security and name trace, credit report, motor vehicle records, reference check, military service verification, civil court records, education confirmation, employment verification, credentials and licenses verification, sex offender registry check, and drug and alcohol testing.
Please keep in mind that you must obtain an applicant’s written authorization before you conduct a background check. Standard authorization forms should be available from the company you contract with to provide the background checks. A job applicant in California or a current employee gets a more extensive notice than the one required under federal rules. In California, before a background check is conducted by an outside screening company, the employee or applicant should receive a notice that:

  • States the purpose of the report.
  • Gives the name, address, website address, and telephone number of the screening company used (if any).
  • Includes a summary of rights for the employee or applicant to see and copy any report about the individual.
  • Includes a box to check if the employee or applicant wants a copy of the resulting report (which, if requested, should be sent within three business days of the date the employer receives it).