How to Do Background Checks on Employees: The Complete Guide

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Posted by: David Garcia December 07, 2020

Background checks are one of the many responsibilities a business owner has while growing their businesses. Developing and implementing a background check program can be confusing. Making the wrong decision can cost you financially and increase litigation risk. An area of frequent concern for many business owners is job candidates who falsify their prior job history or have a criminal history.

Yes, there’s not much you can do about the 85% of applicants who lie on their resumes. However, you can strengthen your hiring decisions with background checks that trace employment history and weed out unfavorable applicants. Background checks are also a relatively inexpensive tool to ensure you know if your candidates have been convicted of any crimes.

This article shares the following:

  • An overview of background checks
  • Why background checks are necessary
  • How long do background checks take
  • How to prepare to run a background check
  • What are the right types of checks to run
  • Selecting a background check company
  • What not do when running a background check

What is a background check

A background check is a service that searches if a job candidate has any criminal record history, verifies their past employment or education history, and several other searches such as:

Depending on your business’ needs, you may not require all of the information a background check has to offer. A business with 5-10 employees will have different demands than one with hundreds of employees across the country.

For example, if you need a driver, you may need a report on the candidate’s driving record, but if you’re looking for a cashier, that information is unnecessary. Your industry will also dictate which search components to utilize. For example, healthcare-related companies may want to use healthcare sanction components.

Why is a background check necessary?

Protect Customers and Employees

Employee background checks are essential to ensure that you, as the employer, are not hiring someone who may be a liability or a threat to a safe work environment. Your goal as an employer is to reduce the possibility of violence in the workplace.

You have a legal responsibility to yourself and your other employees to ensure that everyone who works at your business has been thoroughly vetted. Pre-employment screening gives you accurate data that you can use to make an individual assessment of the candidate.

Taking a risk on an applicant can cost money, time, and safety. For example, a person with a violent criminal record has a 28% higher risk of being terminated than someone with a clean record. Or daycare centers use background checks to ensure the candidate does not have a criminal record or has committed a sexual offense.

Verifies Candidate’s Employment and Education History

Employment background checks verify the credentials and education of the candidate in question. Many people lie or exaggerate on a resume, and an employee background screening is an efficient way to make sure that they are qualified for the position.

Reduce the Risk of Fraud

If your company allows employees access to money or the ability to initiate financial transactions, you want to know if your candidate has any financial related fraud criminal history or debt issues which may be highlighted on an employment credit report. Understanding these convictions or debt issues will help you reduce the risk of financial fraud at your business.

How long do background checks take?

A typical pre-employment background check is usually completed within 24-72 hours. However, this process can take up to a week, depending on the check’s scope.

While there are “instant” background checks that exist, these take information from public databases that can be inaccurate or incomplete. Background checks that utilize the original county-level criminal record data are the most reliable. While some counties return results in under a day, some may take a few days to conduct additional research. The reason for these delays is only ⅔ of United States counties have on-line criminal record databases.

The other common delay to background screenings are drug tests. Drug test results typically return in a day or two, but if a candidate does not go to a clinic for 3 or 4 days to take their test, this increases the overall background check time. You will want to work with your provider to understand how long a check will take based on your report parameters so you can plan an accurate onboarding program.

What to Do Before Performing Background Checks

Determine What Types of Searches Are Important

A background check report consists of individual searches. These searches cover criminal record histories, employment & education verifications, drug testing, and much more. Designing the right background check package is important so you are conducting a thorough screen.

Check With Your Lawyer

Performing a background screening falls under the Fair Credit Reporting Act (FCRA). There are many implications to the FCRA, but one of the most important is ensuring you are capturing the correct authorizations from candidates before running the check. To make matters more complicated, certain states and even cities have additional authorizations a candidate needs to sign as well.

Select A Background Check Company

To help you with the above and actually run the check, you want to select a background check company to help. You will want to select a firm that has strong reviews, good customer references, and is transparent about their services. See below for more information on selecting the right background check company for your company.

What are the right types of checks to run?

There is a specific background check you may see advertised that we want to warn you about. Often, these are low-cost checks, that cost under $5 for a report. These reports are often just the results of a national criminal database.

However, this is just a “database” of screen scraped records and other sources and does not provide a comprehensive view as they often only cover about 70% of the United States. While these databases have value as part of a background check report that searches at the county court level, they are not good stand-alone solutions.

Additionally, these reports may not be compliant. Some background check vendors will not validate findings at the original reporting source and may not be complying with the most conservative interpretation of the Fair Credit Reporting Act. Just because a background check is inexpensive in the short-term, it doesn’t compare to endangering your workplace or a lawsuit.

All that said, here are often two types of packages to consider as part of an employment background check program.

Criminal Package

A basic criminal background check is great for positions that don’t require the verification of specific education or former positions. The components to make sure are included would be the following:

  • Person Search (used to validate an SSN # and generate a list of counties to check)
  • National Criminal File
  • Sex Offender Registries
  • Terrorist and Financial Sanctions
  • County Criminal Search
  • Federal Criminal Search (all districts)

Criminal + Verifications

A basic criminal + verifications package is great for positions where a person’s educational history and their past employment experiences are critical to validate. The searches to make sure are included would be the following:

  • All of the above criminal components
  • Education Verification (highest degree)
  • Employment Verification (last employer)

In both packages, we recommend checking all aliases and utilizing a 7-year reporting history as well as a 7-year residence history.

Additional Components To Consider

Below is a list of additional “ad hoc” components you may also want to consider:

  • Motor Vehicle Records (MVR). This search is essential if the candidate is using a vehicle.
  • Drug Tests. Drug tests are frequently used among employers.
  • Employment Credit. This search type is often utilized for financial positions.
  • DOT Searches. There are several different types of Department of Transportation searches used for commercial driving roles.
  • Medical Sanctions. There are several different types of medical sanction searches for anything healthcare-related.

For a complete listing of search types, click here.

Selecting A Background Check Company

Selecting the right background check company will help you implement a solid program. There are hundreds of background check companies to choose from and the process can be very confusing. To help you pick the right vendor, below are a few questions you want to ask them:

How will you keep my company compliant with background check laws?

Employment background check laws at the federal, state, and local levels are constantly changing. There are also active lawsuits targeted at companies that are not compliant with these laws as they operate background check programs.

You will want to ask a potential background check vendor how they ensure you have the right documents needed based on where a candidate both lives and works. You will want to ask the background screening vendor who they utilize to ensure they are remaining compliant with the myriad of laws. To learn more about compliance, just click here.

How easy is your technology to use?

As a business owner, you are likely using multiple software tools to run your business. Rarely do you find a small business leader who has time to learn a new technology tool.

You will want a background check partner whose technology is incredibly simple. If it is taking you more than 15 minutes to learn the background check software, it is too hard!

For your candidates, the background check software should be even easier. Easy-to-use candidate authorization tools should take less than 3 minutes for criminal record related background checks and under 5 minutes for verification background checks.

Who is my point of contact on questions?

The background check vendor should provide you a specific person who is knowledgeable about your candidates and reports. Far too often, you will be provided with a generic call center number or, if you have a larger budget, an account manager who is not familiar with your program’s ins & outs.

You want the specific researcher who works on your business because your recruiters need to resolve their question or problem on the first contact, whether by email or phone. Your recruiters are too busy to wait for a call center employee to tell them they need to research the answer, spend a day or two tracking down and answer, and then getting back to you. Your recruiters need answers on the spot.

To learn how this type of service experience can help your small business, click here for a case study from Custom Staffing.

What NOT To Do When Performing Background Checks

Ignore Adverse Action Procedures

If you decide not to hire someone because of the background check findings, you need to follow strict procedures to give them notice. These notices are called pre-adverse and adverse action letters. You need to issue pre-adverse and then wait at least 5-7 business days before issuing a final adverse action notice. This gives the candidate time to dispute any findings.

Throw Away Signed Authorizations

Signed candidate authorizations for background screenings are very important. Should you ever get sued, you will need to produce those signed documents. If you are using a background check partner with electronic signatures, you should be covered. However, if you are collecting these documents yourself on paper, you need to store them in a secure area where they can be easily accessed should you need them.

Ignore Candidate Complaints

Mistakes can happen on background checks, often with common names. If a candidate ever states that a record on their background screening report is incorrect, you will want your background check company to immediately open up an investigation. The company technically has 30 days to conduct an investigation, but a good firm should complete the investigation in a few days. Do not make a decision on a candidate until this investigation is complete or you could be opening yourself up to litigation.


If you want to run a background check on all future employees, you can expect a more efficient hiring process with better results and less risk. Consider your company’s needs and compare it against the federal, state, and local regulations for background checks in your area.

For the best job search:

  • Be thorough and detailed.
  • Conduct verifications on every candidate.
  • Don’t do it yourself: it costs more in time (and legality) to try to cut corners. Take the time to make a well-informed hiring decision, and make sure you and your hiring managers are on the same page.

To run efficient, fast, and affordable employment background checks on all future employees, you’ll need a high-quality and fast screening provider you can count on. Our team at ScoutLogic provides a full suite of background checks:

If your business could benefit from an online background check service, contact ScoutLogic today.

ScoutLogic is not a law firm and nothing in this article should be construed as legal advice. Always check with a qualified attorney before making any changes to your program

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