Background Checks for Small Businesses

As a small business owner or human resources leader, you likely wear many hats. One of those hats is probably hiring, which includes finding and selecting great talent to help you grow and on-boarding and HR compliance. Part of HR compliance is running background checks. Background checks can be very confusing. Small business owners often ask: what makes a good background check? Am I overpaying? Am I compliant with Federal and local HR laws? This article helps small business owners pick the right packages and tips for remaining compliant.

Designing The Best Small Business Background Check Program

Why do some background checks cost under $20 and some cost more than $100? Often the marketing description sounds very similar so it can be hard to ensure you are getting the best background check for your company at a fair price. To help you pick the right background check and make sense of all the marketing & sales noise, this article provides suggested “packages”. A background check package consists of individual search components. It is these components that often drive the cost of that background check. To give you a starting point below are two types of packages. One package covers criminal components and the other includes professional components. If you need additional help, please don’t hesitate to contact us, and we can help you pick the right components.

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 two types of packages to consider as part of a background check program for a small business.

Criminal Package

A basic criminal package 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.

View a complete list of search types here.

Compliant Small Business Background Checks

One of the most common small business background check compliance mistakes we see is when you run one yourself. Typically, a small business owner will go to a state or county database, type in a candidate’s information, and use the results. This is absolutely not a compliant or quality check for three reasons.

1. You need a candidate’s permission to run a background check

The Fair Credit Reporting Act, as well as many state and local laws, requires you to obtain a candidate’s permission to perform a background check. There are specific forms you need to utilize based on where the candidate lives and works. Not using the correct forms with candidates open you up to substantial litigation exposure. Don’t make this mistake!

2. You need to search the right geographies

State repositories of criminal records often do not contain complete information. County-level criminal courts are the best sources of information. Your local county may provide a free, online database; but what if the candidate has moved to several counties over the past seven years. How do you know which counties to check? What if they were convicted of a crime in a county and then moved? This is what background check companies use data sources that identify where a candidate has lived so they know the correct jurisdictions to check on your behalf.

3. Your insurance provider may not accept it

Your insurance policy may require you to run background checks on employees and even contractors (always read the fine print!). If you are running a background check on your own and not through a qualified vendor, you may be breaking the terms of your policy. If you have some sort of claim activity that is then related to that employee, the insurance company may not provide coverage. Additionally, many commercial insurance policies exclude Fair Credit Reporting Act claims. You will want to carefully review all the exclusions in your policies to ensure nothing will prevent your insurance company from covering any background check-related claims.

Please note, ScoutLogic is not a law firm, so you always want to make sure you are speaking with qualified counsel.

Great Service for Small Businesses Owners

Everyone has more work than they can handle these days. You are busier than ever and under constant pressure to find great people to hire. As a small business owner, you don’t need to spend time thinking about background checks or following up with candidates to answer questions. That is the job of your background check vendor! To help you pick the right vendor for your small business, below are a few questions you want to ask them?

How will you keep my small business compliant with background check laws?

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 check vendor who they utilize to ensure they are remaining compliant with the myriad of laws. Learn more about compliance here.

How easy is your technology to use?

As a small 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 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 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, watch this case study on Custom Staffing.


As a small business owner, you need a background check partner who will make your life easier. Making the wrong background check decision can increase the risk to your workplace safety as well as lawsuits. To make background checks easy for small business owners, ScoutLogic’s unique “Scout” service model gives you dedicated researchers that improve service levels, return reports faster, and are of high quality. ScoutLogic supports hundreds of small and mid-size small businesses and is consistently among the highest-rated background check firms on Google and Glassdoor. ScoutLogic offers everything you need in background check services to run high-quality background checks with great service. To learn how ScoutLogic can help, schedule a free assessment for your program.

Looking for a Better Background Check Company?

Make sure your screenings are compliant, cost effective, and not costing you hiring delays.


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  • Save money
  • Return checks faster
  • Improve  compliance

Thousands of recruiters trust ScoutLogic to make background checks easier, so they can focus on finding great talent.

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