12 Crucial Components Every Human Resources Professional Must Know About Employment Background Screening.

Number 1 – It starts with the Policy!

As with any company procedure, a nondiscriminatory background screening policy is mandatory to deter any claims of discrimination brought against the company. The background screening policy will help employers with the following:

Reduce claims of discriminatory treatment brought by applicants who have not passed the employment background screening process
Promote a safe workplace. Employers are protecting their assets which includes their employees and property by conducting background checks.
A policy sets parameters for disqualification due to an adverse background check.
A policy confirms compliance with Federal and state regulations. Furthermore it may be required if companies want to do business with the federal government.
The policy will also breakdown processes that will be used to perform the background check (for instance having the applicant complete the authorization form and then provide them with compliant notices.)
By having a compliant policy companies will effectively limit their exposure and liability of claims.
A compliant background screening policy reduces operating costs by decreasing employee turnover, and limiting exposure to litigation.

Number 2 – 7 vital sections every background screening policy should have.

The background screening policy should have seven crucial sections consisting of the following:

The purpose of the policy, and states why the organization conducts background checks;
The scope of the policy, which should be designed to protect property and people you will come in contact with;
Identifying the responsible organization dictates which department will be implementing and managing the policy;
Sensitive positions, and additional searches specific to such positions;
Hiring manager’s responsibility when reviewing an employment background check.
Record retention (how records should be stored and how long they should be stored);
Legal compliance to ensure the company abides by the Fair Credit Reporting Act and other federal and state laws.

Number 3 – Violate the FCRA and you will be in a world of hurt.

Compliance with the Fair Credit Reporting Act (FCRA).

The FCRA was created in 1970, specifically to address issues regarding consumer credit. The FCRA’s main purpose is to promote accuracy, confidentiality, and relevancy of information being reported on consumers. It was amended in 1996, and now the main purpose is to regulate the use of consumer report information and other background information received about applicants from consumer reporting agencies. The FCRA is not just limited to credit report; it also includes other information that has bearing on a consumer, including public records which include employment history, educational history and drivers’ history. A complete version of the FCRA can be found here (http://www.ftc.gov/sites/default/files/fcra.pdf)

Number 4 – The most important section of the FCRA every employer must know.

Important section of the Fair Credit Reporting Act.

Section 604E, subsection 2 of the Fair Credit Reporting Act states:

Before requesting an employment background report, the employer is required to provide specific disclosures to the consumer, also known as the applicant disclosure and authorization form. (Need slides with the forms) Employers must disclose to the applicant that a background report will be procured to determine their suitability for employment.

Disclosure forms should specifically state that the report will be requested from a credit reporting agency.
Name and contact information of the credit reporting agency must be visible.
Type of information that will be provided must be listed. For example, credit and motor vehicle reports.
It’s essential that the disclosure clearly and accurately disclose to the consumer that a consumer report including information about the character, general reputation, and mode of living may be obtained.

Number 5 Do you know what notices and disclosures the applicant must receive?

Employers must also provide specific notices to applicants who are a subject of the background report.

The federal notice is called the FCRA Summary of Rights. This document explains the applicant’s rights under the fair Credit Reporting Act. This must be given to each applicant nationwide.

There are also two states that require state-specific notice:

California, which requires providing the California statement of consumer rights and notice regarding background investigation. If you’re requested a credit report, then they must also receive the California credit disclosure.

The state of New York also requires state specific compliant documents. The first documents is a “State of New York specific release form completed by the applicant. The second notice is called Article 23 a (this has to do with criminal records being reported on New York residents, and obligations that an employer has when reviewing the criminal records of a NY resident)

It’s also imperative that applicants residing in California, Minnesota, Oklahoma, New York and Maine are afforded an opportunity to check a box on the disclosure form stating that they would like to receive a free copy of the report conducted on them.

Number 6 – Do I have certain obligations to notify an applicant if I decide not to hire them based on the background check?

One of the most crucial sections of the FCRA is the Pre-adverse / adverse action process. This is also known as the “applicant dispute process.”

It states:

“If an employer decides to take adverse action in whole or in part on information contained in the consumer report, the employer must take the following actions:

Send the applicant a copy of the report procured along with the pre-adverse action letter, this letter states that adverse information has been reported and the subject of the report has the opportunity to dispute the information with the company that provided the results. The applicant must also receive a copy of the FCRA “Summary of Rights” stating their rights under Federal Law.

After 5 business days have past and no re-investigation is needed then the adverse action letter is sent and the applicant is no longer considered for employment with your company.”

Number 7 – Do background checks really assist in hiring top talent?

Here are a few things to consider when conducting lawful employment background checks.

More than half of disclosure and authorization forms used violate federal law. The most common violation is a waiver by the consumer of his or her rights, not allowing them specific notices or their rights if the employer decides not to hire them based on the background check.

There are steps employers can take to recruit the highest quality applicants.

First, is placing signs at your business disclosing that the company “conducts background checks on all applicants.” Preferably in a place where applications are completed.

Second, placing notices and disclosures on your company’s website will lead to fewer undesirable applicants attempting to gain employment with the company.

Next, if your business posts jobs on the internet or in the newspaper disclose in the announcement that hiring is contingent on passing a background check. This will deter undesirable applicants from even responding to the ad.

Lastly, if your company employs temporary staff then check with your staffing company to see if they have a background screening program in place. If they don’t, find a temp agency that does perform screening.

Number 8 – Don’t be misled, country level criminal searches is the most accurate.

A major pitfall that employers must pay close attention to when ordering background checks is County level criminal searches versus instant database criminal searches.

County level criminal searches are the most comprehensive and compliant form of criminal background checks. Why?

Because felony and misdemeanor records are held in each county nationwide. That’s right: records are stored in over 3,500 counties across the United States. There is no centralized database that contains each and every one of these records.
County criminal records are indexed by name and date of birth match.
Records are pulled in “real time” by licensed county courthouse researchers.
County level criminal searches are the only way to determine if in fact an applicant has a criminal conviction record.
Now let’s talk about instant nationwide criminal database searches. There are two limitations identified by the Fair Credit Reporting Act pertaining to nationwide criminal database searches.

First, the information contained in databases is not updated in “real time,” meaning it can take up to 2 months to have a case uploaded to these instant databases. This can lead to missed records.

The second limitation is that not every single county in the United States contributes records to a nationwide database. This can present a problem if the applicant has lived in a county that doesn’t report records to a nationwide database.

Another issue is that records found in these databases are often held by name only, meaning date of birth information is not used. Remember, county level criminal records are identified by a name and date of birth match which is significantly more accurate than a name-only search – especially with common names.

It should also be noted that the majority of the records found in instant databases are older than the 7 year reporting period set forth in the Fair Credit Reporting Act.

Many employers think that by conducting a nationwide criminal database search they are doing a complete and thorough background check. However, by only utilizing a nationwide criminal database search, employers may unintentionally hire someone that has a recent criminal conviction from a county that doesn’t report records to a nationwide criminal instant database.

Number 9 – The importance of checking Federal Crimes.

Federal crimes are crimes that have to do with charges such as weapons violations, interstate drug activities, embezzlement, and mail or wire fraud.

Federal criminal record searches are conducted through the federal crime repository for each and every federal district court in the US. Statewide and nationwide searches are available.

These searches are often recommended when screening for executive-type positions because they will often reveal white-collar crimes that wouldn’t be identified via a county-level search.

Now let’s discuss State-level searches. A state-level criminal record search reveals felony and misdemeanor convictions at the state level. States that offer a full statewide search share information from each county via a statewide repository.

Not every single state offers a “statewide search”; for instance, Massachusetts and California do not offer statewide searches. This would mean you would have to search County by County in these states to ensure you have cleared the applicant for criminal records for the entire state.

Any criminal hits from a statewide search must be researched in the County that has the official record.

Number 10 – So you think you can investigate an applicant’s work history.

The difference between employment and education verification versus an investigation.

When credit reporting agencies conduct a verification, they are verifying what applicants have provided to employers on either a job application or resume. There is no “searching” or actual investigation involved in verification, other than the sense that the goal is to identify fraudulent and/or exaggerated claims of education or of previous salary/reason for separation.

Information that can be verified includes their position held, their employment start date and end date, their wage/annual salary and reason they are no longer employed. If you would like to verify wage/salary and the reason for separation, the majority of employers will require a signed Release form from the applicant before release any information.

Education verifications are for determining if the educational background claimed by an applicant is true or fraudulent. It can include verifying a degree or diploma earned, enrollment dates, and course of study (“major”). An Applicant release form is required to obtain this information.

Applicants and Employers must understand that there is no true way of investigating education or employment, as there are no databases containing each and every degree earned in the U.S. As for employment, the Social Security Administration does keep records of employment in connection to taxes, but this information is not truly considered “public”, and is not accessible to Consumer Reporting Agencies.

Number 11 – Whey employers should implement drug screening as part of the hiring process.

The importance of Employment drug screening.

It’s estimated that between ten and twenty percent of workplace accidents are related to drug abuse.

Furthermore, employees who abuse drugs are 2.2 times more likely to request time off.

Employers may require a drug test when conducting a pre-employment background check, after a workplace accident, or randomly.

Urine drug screening can test for 5, 7, 9, or 10 different types of drugs.

The two most common types of specimens used in employee drug testing is urine analysis or hair follicle testing. Urine is the more popular of the two, however hair follicle testing is the most comprehensive type (detection up to 3 months).

Employers may choose to send applicants to a lab for the test to be administered or may conduct testing on-site using test cups that will provide a negative result instantly. All positive tests should be reviewed by a medical doctor to ensure accuracy.

Number 12 – Social Media background checks, is it worth the liability?

The rise of social media.

The advancement of technology and the ubiquity of the Internet has resulted in a boom in social media. Websites like facebook, twitter and instagram are an everyday part of life, especially for those seeking employment.

Let’s first look at the positives of utilizing social media searches for hiring. Employers now have the luxury of posting job announcements to every type of social media provider like LinkedIn and facebook. This will create much higher awareness of the position and attract a greater number of applicants. Another positive is many businesses have their own social media accounts, which allows them to stay in contact with their customers and show that they are keeping up with technological advances.

Now let’s discuss the pitfalls of conducting social media searches as part of the employment background process. The FCRA states that employers must use information that is of “the most maximum possible accuracy”, meaning public record information being reported has been reviewed for accuracy. This is not the case for social media searches, as there are not enough personal identifiers (Social Security number, date of birth, home address, etc.). There is no way of being certain that the facebook account you are viewing was actually created by the applicant and not another person with an ulterior motive or the same name. Secondly, part of the pre-adverse and adverse action process entitles applicants to a copy of the report and the ability to dispute any inaccurate information in the report. Most importantly, employers must beware that they could be violating federal law by screening protected classes by using social media searches as a screening tool.

Remember, if you are going to utilize social media as a screening tool, you should first make sure you have a social media policy in place (especially if you are going to monitor employee activity).

Research Your New Hires!


Workplace Violence
One out of every six crimes occurs in the workplace and homicide is the second leading cause of workplace death in the U.S.

Education Falsification
National Credit Verification Service reports that 25% of the MBA degrees it verifies on resumes are false.

72% of shrinkage is due to employee theft.
34% of all job applications contain lies.
30% of small business failure is caused by employee theft.