Basics of Background Checks

Employers utilize the services of companies that perform background checks to verify the accuracy of information provided by the candidates.  Background reports can also uncover information left out of the application or interview.  Today, more employers are being sued for ""negligent hiring"" for not checking carefully enough into the background of a potential employee. If an employee's action hurts someone, the employer may be liable. With the public focus more and more on hiring decisions at all levels, at my company, Securit®, the number of requests for background checks has been steadily rising over the past 18 months. 

What information might be in a background check?
Background reports can range from a verification of an applicant's Social Security number to a detailed account of the potential employee's history and acquaintances. Some of the pieces of information that might be included in a background check are: driving record, criminal record, education record, property ownership, bankruptcy, employment verification, credit records and more. However, the employer is required to get the prospective employee's permission before obtaining the records.  (NOTE:  Many of these sources are public records created by government agencies.)

What types of information can't be legally obtained?
Federal and state laws limit the types of information employers can use in hiring decisions.

One example would be a workers' compensation claim.  A report on a background check for Workers' Compensation would show accident dates and types of injuries for all worker's compensation claims.  However, this information must be used within the guidelines  established under the Americans with Disabilities Act (ADA).   When an employee's claim goes through the state system or the Workers' Compensation Appeals Board, the case becomes public record. Only if an injury might interfere with one's ability to perform required duties may an employer use this information. Under the federal Americans with Disabilities Act, employers cannot use medical information or the fact an applicant filed a workers' compensation claim to discriminate against applicants. (42 USC §12101).

Generally, you can obtain anything that has been recorded as public record.  However for certain information such as Sexual Offenders, the laws vary from state to state as to what data is made public.  Other information such as  bankruptcy information, criminal or civil court convictions, property assets, etc. is easily obtainable.  Suffice to say that anything of public record is easily obtainable from various databases.

What can former employers tell you?
Often a potential employer will contact an applicant's past employer(s).   The former employer can say anything [truthful] about your performance. However, most employers have a policy to only confirm dates of employment, final salary, and other limited information. Documents in your personnel file are not confidential and can be revealed by an employer. Only medical information in a personnel file is confidential. If you are a state or federal employee, however, your personnel file is protected under the federal Privacy Act of 1974  (5 U.S.C. §552A) and can only be disclosed under limited circumstances.  (SOURCE: www.usdoj.gov/foia/privstat.htm).

What are the prospective applicant's rights?
You must disclose to each prospective applicant that your company has a policy of conducting background interviews. Amendments to the Fair Credit Reporting Act ( FCRA, 15 USC §1681), in effect September 30, 1997, increase the disclosure and consent requirements of employers who use ""consumer reports."" Such reports might consist only of a credit check, which does/does not require a background check. For more extensive reports which might include criminal histories, driving records and interviews with neighbors, friends and associates, the employer must obtain the prospective applicant's written authorization before it is conducted.

The Benefits
The benefits to conducting the background check may differ depending on your industry.  If you are in the transportation industry, for example, when hiring drivers for your fleet it would certainly behoove you to conduct a background check on the applicant's driving record.  If the applicant you hire has a history of accidents which you failed to check, you could be sued for ""negligent hiring"" if they get into an accident.  More employers are being sued for ""negligent hiring"" today for not checking carefully enough into the background of a potential employee.  If an employee's action hurts someone, the employer may be liable for not conducting a background check.   The cost of the background check is negligible when compared to the cost of potential litigation.

Summary
If you are going to perform background checks on prospective employees you need to take the following steps:

1) Implement a policy of conducting background checks in a uniform manner as part of your hiring practices to avoid the appearance of discrimination.  You should disclose the background check requirement to every prospective employee and to avoid any misunderstanding, do so in writing.  Any prospective employee will need to sign an authorization to release information.

2) Obtain permission from the prospective employee authorizing your business to perform the background check.

3) Contact a reputable investigations firm to perform the background check. And remember, the investigation informaiton is only as accurate as the databases it came from.  Make sure that the investigative firm you choose holds a private investigators license.  Much of the information you may be seeking cannot be accessed legally without an investigators license.


Conducting background checks on prospective employees are a good idea for many businesses.  Remember to utilize those checks in a consistent manner as part of your company's hiring process to avoid creating problems of your own.