Employment Background Checks Should Be a “Pay-As-You-Go” Service

Pay-as-you-go Employment Background Checks

Most employers decide to implement some form of employment background checks to ensure their applicant is a suitable fit with their organization.

First, they must develop an ironclad compliant employment background screening policy that will enable the organization to effectively manage the background screening process. Once the policy is vetted and published, the employer is now ready to start ordering employment background checks. When doing so, the organization must align itself with a competent and compliant third-party background screening vendor or Consumer Reporting Agency (CRA) to maximize their return on investment (ROI). Employers Choice Screening recommends choosing the option of pay-as-you-go employment background checks. This type of dynamic online screening application is known as software as a service, or a SaaS app.

When engaging a CRA, employers should evaluate the CRA’s pricing structure by clarifying the following things:

• Is it a contract for an undisclosed period of time? Contracts are generally two years long on average.
• Is there a subscription or monthly minimum requirement?
• Lastly, does the CRA charge any set-up fees?

Here is a more thorough explanation of these three pricing structures in order for your organization to make an informed decision when selecting a background screening provider:

• Annual Contracts
  Similar to any other professional service, some CRAs will require the end-user (who are employers in this case) to sign a contract ensuring their business for at least one to two years. This should be a deal breaker for any employer for many reasons.Since the CRA would be guaranteed business with your organization for at least a couple of years, there is not an incentive for them to perform at their highest potential.Contracts also leave the door open for background screening companies to raise rates without any notification to the employer, and will lock them in at a higher rate for the duration of the contract. Employers must ensure that their contract does not include any language referring to a “release of liability,” which is how CRAs try to not be held liable for any inaccurate information they provided that may result in their client facing litigation. In these situations, the employer would be held liable even though they did not procure any of the background check information themselves.

  Lastly, as with any contract, if an employer is unsatisfied with the services received and wanted to cut ties with their selected CRA, their organization will most likely be required to pay a hefty early termination fee. Pay-as-you-go employment background checks, on the other hand, are ordered at the discretion of an organization’s hiring needs.

• Monthly Minimums
  Larger employers that have a higher volume of background checks to complete may elect to engage a CRA that provides a one-time flat rate cost for a pre-determined quantity of searches. For example, an employer may disclose that they conduct 100 background reports a month and would like to pay for these 100 reports up front.What employers fail to understand is that the cost of each background check differs from applicant to applicant because of multiple factors. An example of this can be seen through county criminal searches, which are felony and misdemeanor convictions held in each county nationwide.You may have one applicant that has resided in only one county the last seven years as opposed to another applicant that has lived in five different counties in the same amount of time. In many cases, the CRA will include only one county and charge for the additional four counties in addition to the monthly minimum price. Another reason why monthly minimums are not recommended is due to additional third-party fees such as education verification, employment verification, state driving (DMV), third-party collection site for drug testing, state repository fees, and county repository fees. These additional fees would not be determined until the actual background check was ordered and would be in addition to the monthly minimum cost.

  Employers should not be under the impression that they will only pay one set price per month to receive an allotted amount of employment background checks without additional fees. With pay-as-you-go employment background checks, there are no hidden fees whatsoever.

• Set-Up Fees
  Some CRAs will impose set-up fees for different purposes. If the employer is smaller in size, a CRA will require a set-up fee to cover operational costs and time in establishing the account. Their philosophy is to not waste time on smaller accounts that would not be as lucrative as larger ones. There may also be a set-up fee charged based on certain searches being requested by the employer. With drug testing, an employer may be charged a set-up fee to screen applicants for illicit drugs to establish the drug testing component. This fee can range from $100.00 – $500.00, and is just to set up the account. It is not part of the cost to run the actual background check.When CRAs perform credit reports, however, they are mandated by the credit bureaus to conduct a physical onsite inspection to validate and verify that the employer is who they say they are and have safeguards in place (such as password protected computers, shredding services, etc.) to protect consumer credit information.CRAs would engage a third-party organization to complete the onsite inspection on their behalf and as an industry best practice would usually pass that fee onto the end-user (employer).

Our recommendation is for employers to elect to utilize pay-as-you-go employment background checks because it allows for flexibility between applicants, complete transparency on the cost of each background check, and is scaled based on the growth of the organization.

Employers are encouraged to evaluate the performance of their background screening program to make sure they are receiving the best value the market has to offer. A clear understanding regarding the terms and expectation of services is fundamental in fostering a quality and long-term relationship between Employers Choice Screening and our clients.