HR 101: The Benefits of Background Checks for Employers

A background check is a common procedure that most companies implement when hiring a new employee. This process delivers detailed information on the applicant to ensure that they will make a safe and reliable hire. Although it is commonly practiced, not all companies make it a standard practice, which could cause repercussions in the long run. Employers need to understand the importance of background checks, why they should implement them, and how best practices can improve the workplace environment.

When implementing background checks as part of the standard employment screening procedures, employers can expect the following for their company:

Maintaining Quality

It’s important that employers maintain standards when making hiring decisions to keep their workplace safe. If applicants have anything to hide, they will most likely not want to apply to a position requiring a background check. Implementing employment screening procedures, such as a background check, will most likely improve the quality of the applicants who apply, making hiring decisions a lot easier since they won’t have to “weed out” insufficient applicants.

Workplace Safety

Your workplace should be a safe environment for all employees. Whether you’re hiring someone new or following up with your current employees, a background check will ensure that the individuals who work for you maintain compliance and safety standards. Ongoing background checks are not always implemented by employers, but they help to maintain safety by ensuring that employees are still following company policies even after they are hired.

Certain positions require employers to include specific practices during the hiring process to ensure that they are suitable to perform job duties. Employers need to ensure that employees being hired for safety-sensitive positions or positions requiring an employee to handle company confidential materials can be trusted. Such examples of industries include, but aren’t limited to:

• Medical

• Accounting

• Transportation

• Education

• Engineering

• Industrial (e.g., Energy, Oil & Gas, Chemical)

Reduced Costs

If you don’t hire the right candidate the first time, then your employee turnover rate and costs will increase. Employee training, recruiting and hiring, wages, and benefits are all factors that are costly to employees and have to be executed all over again if the first hire doesn’t work out. Also, background checks can prevent employers from hiring dishonest employees with a criminal history, which not only is a danger to the workplace but leads to:

• Higher insurance premiums

• Employee turnover

• Increase in theft

• Absenteeism

• Increase in accidents

• Increase in workers' compensation claims

• Decreased employee productivity

• Negligent Hiring Risks and Liability

It is the employer’s duty to ensure their working environment meets compliance and remains safe. Employers are held accountable for what they know and what they should have known about an applicant during the hiring process, as well as maintaining a safe environment throughout the entire employment. Depending on the industry, employees who hold safety-sensitive positions pose a risk to themselves and those around them. For this main reason, employers need to take reasonable care when hiring an employee, and they can use background checks to thoroughly understand who they are. This will reduce risks and liability associated with negligent hiring standards.

Reduce Turnover

A background check will also help employers reduce turnover rates. By implementing background checks during pre-employment screening procedures, employers will verify if an applicant remains truthful and will gather information that can assist with making safe hiring decisions. This also helps to reduce risks and costs associated with hiring a bad employee. In addition, reducing turnover rates in the workplace means that employers won’t have to waste time retraining new hires, which will help companies advance with a team that’s motivated to work and grow.

Invest in a Better Product

Background checks can come in a variety of forms, but what most employers don’t realize is there’s a difference in what you order. It’s important that employers understand the difference between an instant background check and a comprehensive background check to ensure they get the results they need to make a safe and smart hiring decision.

An instant background check is generally cheaper and is often advertised as having a quick or almost immediate turnaround time. These checks are also known as “national criminal database searches” and provide very general information pulled from a commercially available database. Since they aren’t corroborated against official country court records, information will often return with errors. Instead, employers should implement a comprehensive background search, which uses information gathered from a database search and pairs it with other products or services to further verify the data.

Instant background checks could lead employers to believe that they are creating a safe working environment, which could be worse than no background check at all because they use inaccurate information. Cheaper options may also not follow federal and state legal requirements, leading to liability and legal issues.

Maintain Compliance

By implementing background checks, your company prevents potential risks, fines, fees, and lawsuits. While doing this can ensure that your company and employees remain safe, it’s important to abide by the rules set forth by the FCRA when implementing such practices. Employers must meet the following when making hiring decisions:

• Permissible Purpose: An approved reason under the FCRA to conduct a background investigation (i.e., credit, employment, tenant screening, insurance, government license, child support enforcement or court order)

• Provide a disclosure in a clear and conspicuous written document

• Obtain written authorization (in a standalone disclosure) from the candidate to perform a background check

• Follow the adverse action process before denying employment based on the background report

If a background check reveals any adverse information, then the employer must follow the adverse action process. The employer must first provide the applicant with a pre-adverse notice, which informs them that something adverse has returned in their background check, which may or may not affect their hiring decision. This allows the applicant the opportunity to file a dispute before an adverse action notice is sent. An adverse action notice must only be sent if the employer denies the applicant the position based solely on the information from the background check.

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