Background Checks 101

Master the Basics: Employer Background Checks 101 Essentials

Hiring the right employee is pivotal to the success and safety of any business. It's about finding someone with the right skills and ensuring they are a trustworthy and reliable addition to the team. According to Forbes, nearly 70% of candidates acknowledge embellishing their resume or job application, underscoring the importance of background checks to authenticate the candidate's integrity.

Understanding what a background check involves, the different types that are available, and how they influence hiring decisions can be overwhelming. This is why it is helpful to understand why background checks are essential, what types to conduct, and how they fit into the broader context of hiring.

What is a Background Check, and Why is it Important?

A background check reviews a person's criminal, employment, and financial records. Employers often request background checks on job candidates, especially for positions that require high security or a position of trust.

Performing a background check not only protects the company from potential legal liabilities but also ensures the safety of current employees and customers, verifies the accuracy of an applicant's resume and application, and ensures compliance with industry regulations that may require background screening.

The Role of Background Checks in the Hiring Process

Background checks should be performed as part of the hiring process, specifically during the pre-employment stage. This allows employers to make informed decisions and mitigate risks in their hiring choices.

  • Pre-Employment Screening - Conducting background checks before making a job offer ensures that potential red flags are identified early in the hiring process.
  • Post-Offer Screening - Once a job offer has been made, employers may conduct additional background checks to verify information provided by the candidate.
  • Continuous Screening - Some industries require regular background checks for employees, such as finance or healthcare.

Types of Background Checks Employers Conduct

Criminal History

Can reveal prior convictions relevant to their job suitability. This is particularly significant for positions that demand a high degree of trustworthiness.

Employment History Verification

This process ensures candidates have the experience and skills they claim. It confirms past employment dates, positions held, and reasons for leaving former jobs.

Education Verification

Confirms whether the applicant has the required degrees or certifications claimed on their resume.

Credit History

Essential for roles that involve handling company finances, indicating a level of fiscal responsibility (and is regulated under the Fair Credit Reporting Act).

Reference Checks

Provides further insight into the applicant’s work ethic, reliability, and qualifications.

Best Practices

Employers must comply with federal and state laws when conducting background checks to avoid potential legal consequences. Some best practices for conducting background checks include:

  • Having a clear policy outlining the types of checks that will be conducted and how the information will be used.
  • Ensuring consistency in the background check process for all candidates to avoid discrimination claims.
  • Only consider information that is relevant to the job requirements.

The Federal Trade Commission (FTC) and the Equal Opportunity Employment Commission (EEOC) have created a guide to help employers get started: Background Checks What Employers Need to Know.

Restrictions on Employers for Gathering Information

Under the Fair Credit Reporting Act (FCRA), enforced by the FTC, there are clear restrictions on how employers can gather and use this information. Here's what employers need to know to stay compliant:

  • Written Permission: Obtain written permission from the individual before seeking a consumer report. This cannot be buried in the fine print; it must be a clear, stand-alone document.
  • Pre-Adverse Action Disclosure: If the information in the consumer report may result in a decision not to hire the applicant or to take any other adverse employment action, the employer must provide a copy of the report and a summary of rights under the FCRA before taking adverse action.
  • Adverse Action Notification: Should adverse action be taken, employers must give the applicant notice—preferably in writing—of the actions taken, along with specific information, including the contact details of the credit reporting agency that supplied the report.
  • Data Disposal: Follow proper disposal methods for consumer reports to protect against unauthorized access or use.
  • Discrimination Concerns: Ensure that the background check process is consistent for all candidates, regardless of race, gender, age, religion, national origin, etc. Failure to do so could result in discrimination claims.


It is important to have a thorough understanding of the FCRA and its guidelines for conducting background checks. By obtaining written permission, following proper disclosure procedures, and disposing of information securely, employers can ensure compliance with the law. Additionally, it is crucial to treat all candidates equally in the background check process to avoid any claims of discrimination. Overall, by staying informed and adhering to these regulations, employers can protect themselves and their applicants while making informed hiring decisions.


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Master the Basics: Employer Background Checks 101 Essentialshttps://www.cbiz.com/Portals/0/Images/HCM_background_check_101_hero.png?ver=lrRYks8ieXSPwm1Bkxy5tQ%3d%3dhttps://www.cbiz.com/Portals/0/Images/CBIZ_HCM_background_checkl.png?ver=1imvBZwjB9fWjMOPF-bdGA%3d%3dLearn how to conduct employee background checks in compliance with the Fair Credit Reporting Act (FCRA). 2024-03-28T17:00:00-05:00Learn how to conduct employee background checks in compliance with the Fair Credit Reporting Act (FCRA). Our guide covers obtaining consent, proper disclosure, adverse action procedures, secure data disposal, and avoiding discrimination.Employee ManagementHRIS SolutionsPayroll ServicesYes