Hire Smart. Do Background Checks.

Authored by Steve Holden. Published in the Sacramento Business Journal June 2014. Hiring an employee can cost a fortune. Advertising and headhunter fees can be huge. Even absent such fees, the time invested to review applications and interview candidates is a significant cost. The cost might also materialize with a bad hiring decision. The new employee is unproductive, offends customers, steals from the inventory, etc. So, hire smart! Every employer has heard those words of wisdom. But, what does it mean and how is it done. The answer to those questions will vary widely depending upon the industry and the position you are seeking to fill. In all cases, however, smart hiring requires some level of background checking. A background check can be as simple as checking the information on the employment application or resume. It can also be as complex as hiring a private investigator to speak with a host of people who may know details about the applicant. Common forms of background checking include DMV pulls, criminal record checks and credit reports. Information obtained through a background check can lead to better hiring decisions. There are, however, reasons to refrain from some types of background checks. Some forms of background checking are prohibited by law and other forms may be too costly or unreliable to be worthwhile. Here are some of the pros, cons and general information to consider when evaluating a background checking policy or protocol for your organization: Pros:

1. Enables you to learn if the applicant misrepresented information on the application or during the interview process. Even if the misrepresentation does not relate to a material qualification for the job, it provides insight into the applicant’s ethics and personality.
2. Enables you to gain access to the applicant’s qualifications, or lack thereof, that go beyond what is obtained in the application and interview process. For instance, speaking with the applicant’s former employer or others who know the applicant can be very illuminating. You can develop a comprehensive view of applicant’s personality and work habits that will help determine whether the applicant will be a good fit for the position.
3. Minimize the risk of hiring a dangerous person. Learning that a candidate has an unsavory past, including sexual misconduct or assault convictions, before the applicant is hired could keep your employees and customers safe and protect your organization from negligent hiring liability.

Cons:

1. Thorough checks can be time consuming and costly. Accordingly, you will need to evaluate the benefits against the costs in time and money. Also consider the delays that may result in the hiring process. In a competitive market, a highly qualified employee may take another job while you are waiting for the background checking company to complete its work.
2. At times the information returned through background checking is inaccurate. Accordingly, you should be careful in selecting the individuals and companies who will conduct the checks for your organization and determine the extent to which information is verified.
3. You may alienate promising candidates. Just because you may be able to obtain detailed information does not mean you should. Some talented applicants may view their privacy as more important than your job.
4. Done incorrectly, background checks can result in lawsuits and liability. Certain types of background checks require specific disclosures to the applicant. Some are not permissible at all. In other cases, the background check is permissible, but using some of the information revealed on the report is not.

Basic Legal Limitations:

1. Employers may not use an applicant’s arrest records in making a hiring decision. Do not obtain the information on applications or through background checks.
2. Employers may not ask an applicant to disclose and may not use in making a hiring decision criminal convictions that were judicially dismissed or ordered sealed. Some marijuana-related convictions are likewise prohibited in hiring considerations.
3. With exceptions for some specific jobs, background reports should not contain criminal convictions that occurred more than seven years in the past and bankruptcies that occurred more than ten years in the past.
4. Employers are limited on how they can obtain applicant information through social media. For instance, you may not require an applicant to provide the username or password to social media accounts.
5. Employers cannot obtain a credit report on an applicant unless the applicant falls within one of eight enumerated exceptions.
6. Employers utilizing “investigative consumer reports” must provide the applicant with a specific, detailed notice and receive the applicant’s consent before the report is obtained.