Why every SMB should do Background Checks

Monday, December 17, 2007
Posted by John Allmon

As a Small or Medium Business owner, it doesn't matter whether or not your business is large or small employment background checks are vitally necessary in order to avoid potential lawsuits and the expenses caused from hiring the wrong person. Not so long ago, one could get by with simply checking the references a potential employee listed on their job application, probably by making a phone call or two. This was the only type of screening that was common then. Times are just not that simple anymore!

Many things have happened to change the business world it's a whole new ball game out there. SMB employers are checking out job applicants and even employees who have worked for their companies for many years to make sure that these people have nothing going on in their private life which could affect their company in a negative way. A background check is probably the most efficient way to do this. It's easier to check out a potential employee before they are hired than it is to have to confront a long time employee with a discovery you have made about their past or current history.

Statistics show that around 96% of companies in the United States choose to do employment background checks, up from 66% in 1996.  The reason for this sharp percentage rise is the fact that most companies are quite leery of lawsuits. They are learning that they can be held responsible for the behavior and actions of their employees and can be taken to court because of them. Especially for SMB it makes good business sense to check out any and all job applicants to be certain they do not have a criminal record, any accusations of business fraud, or child molestation charges, among others.

There are many laws and rules which govern the process of employment background checks. The Fair Credit Reporting Act states that your business must have each employee sign a form called a Disclosure form. By doing this, they are giving you permission to have a background check performed. If a new job applicant refuses to sign such a form, it's a safe bet that he or she has something to hide. The Americans with Disabilities Act states that employers cannot use any person's medical information in deciding whether or not to hire them. An employer is not allowed to ask someone about any disability, visible or otherwise, that they may have. This rule is for businesses that have fifteen or more employees.

Generally, an employment background check can verify or reveal a lot of personal data about a person. Checks can provide information such as social security numbers, criminal records, college and other educational records, driving records, credit records, facts gleaned from neighbors or friends of the applicant, and a person's worker's compensation record in some states. This can be very useful in determining whether or not a candidate is right for the job in question.

There have been instances where identity theft has caused someone to have false information attributed to them via a background check... Most businesses do want to be fair when assessing job candidates, and therefore should strive to use a reputable background check company to gather this information for them, instead of trying to do the background checks themselves in order to save money. Businesses should do what they do best and let a professional background check company do what they do best.

If, after reviewing someone's records, an employer feels that it would not be in the best interest of the company to hire this person, the Fair Credit Reporting Act requires that an "adverse action notice" be sent to the person. It must give them full information about the company that was used to perform the background check. The notice will state that the background check company did not make the hiring decision; rather, the employer did after receiving the personal information about the