Background Checks 101

August 21, 2019by accurateinvest

Hiring a new employee is a big decision that can cost your business a lot of money if it’s not done correctly. To ensure you hire the best candidate possible, it is often a good idea to run a background check before making a final decision.

Background check companies verify critical information like identity, criminal activity, employment and education history, professional licenses, and motor vehicle records. There are numerous background check companies available to businesses of all sizes, and each one offers unique services and capabilities.

In this guide, we cover everything you need to know about employee background check services and how to choose one.


What Do Background Checks Include?

Pre-employment background checks can provide employers with critical details about a person’s past that may impact whether the candidate is a good fit for the job they are applying for.

Pre-employment background check companies offer a wide selection of screening solutions. They use a variety of search techniques, like online databases and in-person courthouse visits, to verify important details of someone’s background within a few days. You can find online websites that offer instant results, but be wary; some of these cannot legally be used for pre-employment purposes.

You must use an agency that complies with the Fair Credit Reporting Act (FCRA). The FCRA governs how background checks must be conducted, which includes obtaining the candidate’s consent to conduct the background check and allowing the candidate to review the results. Using online background check websites that don’t abide by the FCRA leaves your business vulnerable to lawsuits and fines.

The most common background check screenings available include:

  • Social Security number traces and address validations
  • Misdemeanor and felony criminal records searches at the county, state, and national levels
  • Sex offender registry searches
  • Civil records checks

The most common supplemental screenings available include:

  • Employment verification
  • Education verification
  • Professional license verification
  • Motor vehicle records
  • Employment credit reports
  • Reference checks
  • Military records verifications
  • Workers’ compensation history searches
  • Health care sanction checks
  • Drug screening

Most companies use a cloud-based system where employers can request background checks and review the completed reports online. Agencies typically charge per report and take between one and five days to complete the search process. You can choose between an agency that offers pre-set plans, one that offers a la carte options, or one that offers both.


How Much Do Employment Background Checks Cost?

There is no industry-standard fee for conducting an employment background check ‒ the price depends on which searches you need performed. Most background check agencies charge per report.

Some companies offer bundled plans (multiple screenings and checks you can conduct under one plan), and others offer them on an a la carte basis. Of the providers that offer preset background screening plans, typically, they offer a few tiered packages.

Actual costs and checks conducted for each plan will vary based on the provider you choose.

In addition to the fee you’ll pay for a report, be prepared to shell out capital on additional fees.

Some agencies charge a one-time setup fee, ranging from $25 to $50, to cover the cost of the account verification process.

You may also be charged third-party fees for specific checks, like education or employment verification, court fees and drug screenings. These fees vary by state and provider.

In our research, most background check agencies list pricing on their websites, but some did not, and that, in many cases, is because the provider offers screenings that you can mix and match. In these cases, you’ll need to contact a representative for a price quote.


What to Look for in a Background Check Service

With so many background check services available, it can be difficult to know which one is right for your business. There are 10 important features to consider that will help you narrow down the best agencies for your business.

  1. Accreditation and compliance. The agency must be FCRA compliant. If it isn’t FCRA compliant, it legally cannot be used for pre-employment screening purposes. We also recommend hiring an agency that is accredited by the National Association of Professional Background Screeners (NAPBS), since these accredited companies must adhere to strict guidelines.
  2. Accuracy. Ensure that the agency provides clear, accurate and complete written reports. The last thing you want is to make hiring decisions based on inaccurate information.
  3. Checks and screenings available. This is, perhaps, the most obvious thing to look for in a background check company. Choose an agency that can perform every background screen you need – even if that includes supplemental searches like drug testing or motor vehicle records.
  4. Cost. Your budget may be a determining factor as to which company you choose. Factor in any additional fees you may be charged.
  5. Customer support. Background check companies offer support by phone, email and live chat. Choose an agency that offers your preferred method of support, and verify that they have helpful agents.
  6. Customization. This may not be an important feature if you find a company that offers the screenings you need in a bundled plan. However, customization features are useful for businesses that need unique background checks or advanced screens like drug testing and healthcare screening.
  7. Industries served. Does the agency serve your specific industry (transportation, manufacturing, etc.) or offer industry-specific packages? Most background check companies serve several different industries, but having industry-specific packages you can select from can ensure your candidate undergoes a thorough evaluation.
  8. Online portal. Having an intuitive online portal is essential for placing orders and viewing results, especially if you plan on performing multiple background checks.
  9. Technology. In addition to choosing an agency with an online portal, does the agency offer advanced technology features like electronic consent forms and ATS integrations.
  10. Turnaround time. How long does it take to get results? If you are working with a tight deadline, this can be especially important. Some companies list their turnaround times online.

Other questions to consider when choosing a background check service:

  • Do they offer volume or commitment discount pricing?
  • Do they match a competitor’s pricing?
  • Does the service offer a la carte options?
  • Is there a monthly minimum? If so, what happens if you don’t meet it?
  • Are you locked into a contract?
  • What type of security measures are taken to ensure your employee’s information is secure?
  • Do they have a dispute process for inaccurate information?


Background Check Service FAQs

Still not sure if you even need to conduct a background check? Here are several questions and answers that might help you come to a decision.

Q. Why should I conduct pre-employment background checks?

A. Businesses that don’t use background checks when hiring new employees are putting themselves at risk. When a new employee who hasn’t been properly vetted is hired, employers are basically welcoming a stranger into their business. Conducting pre-employment background checks can verify several important aspects of a potential employee’s background.

Q. Background checks seem more useful to large businesses. Do small businesses need to conduct background checks?

A. Small businesses have just as much, if not more, to lose from a bad hire. Bringing in someone with a criminal past who steals from the company or puts co-workers in danger could put a small organization out of business for good. If a new hire lies about their experience and qualifications, you may find them struggling to perform the duties you hired them to do, which can ultimately cost you more money in training. Many background check companies cater to small businesses specifically, allowing you to perform as few or as many background checks as you need.

Q. Do background checks give any insight into what type of employee the candidate will be?

A. Although a simple background check might not tell you how hard job candidates will work if hired, it can give some insight into their character by giving you an idea of how much you can trust them. It can also give you a look into their past education and experience, so you know what level of work to expect from them.

Q. How many businesses find a red flag when conducting background checks?

A. Red flags are more common than you might think. A recent study revealed that 84% of employers discovered a misrepresentation on a resume or job application, and 23% said their background reports uncovered a misrepresentation on an educational degree or credential.

Q. If a criminal background check turns up a criminal record on a potential candidate, can you eliminate that person from consideration?

A. As a standard rule, in order to eliminate a candidate from consideration, the type of criminal activity you find must be related to the employee’s job duties. For example, if you are hiring an individual for a truck driver position, an underage drinking ticket from 15 years ago might not be a valid reason for disqualification but two recent DUI tickets could be.

Q. Do you need a different type of background check service depending on your industry?

A. It depends on the background check service. Some services have a comprehensive selection of screenings that cover a range of industries; others are more limited or specialized in what they offer. There are really only a handful of industries where standard employee background checks might not suffice. For example, those in the healthcare industry need to conduct some additional types of searches. Another is the transportation industry, which often requires a more extensive look at a candidate’s driving record. When choosing a service, ask the background check provider if it can conduct all of the screenings your business requires.

Q. What does it mean for a background check service to be accredited?

A. The National Association of Professional Background Screeners (NAPBS) offers background check services the ability to participate in the Background Screening Agency Accreditation Program. Businesses must adhere to strict guidelines to qualify, so this accreditation is highly revered.  

The accreditation program reviews background check providers on several key areas:

  • Consumer protection
  • Legal compliance
  • Client education
  • Researcher and data product standards
  • Verification service standards
  • General business practices

Accreditation lasts five years. To remain accredited after that, the company must repeat the review process.

Q. With the popularity of social media, shouldn’t background checks examine job candidates’ social network accounts?

A. Although employers might be tempted to check out a candidate’s Facebook or Instagram page to learn more about his or her judgment and character, they could be opening themselves up to lawsuits by doing so. Because of this, it is generally best to steer clear of these avenues and avoid personal bias. However, if you use social media as part of your background check process, take the proper precautions to avoid a lawsuit.

Q. What penalties do you face if you don’t follow the FCRA background screening laws?

A. The two biggest repercussions of not following the laws are being sued by a job applicant, and being investigated and possibly fined by a government agency, such as the Equal Employment Opportunity Commission or the National Labor Relations Board. Following FCRA laws are simple, and many background check companies provide users with additional information on the subject.


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