How Do Background Checks Work?
Many employment offer letters contain language that disclose that the job is contingent upon the successful completion of a background check. These checks may include some combination of an investigation into the employee's credit score, criminal background and even social media activity. The Federal Fair Credit Reporting Act and various state and local laws specify and regulate the rights and responsibilities of companies and prospective employees. Best practices also attend the request for background checks and the prospective employee's provision of information.
Read on to learn what is included in a background check for employment, how they are used and what limits apply.
Why and How Employers Use Background Checks
All hiring activity is characterized as an exercise in risk mitigation. Organizations take what steps they can to reduce the chances of a bad hire. Background investigations into credit history, criminal activity and social media habits can help illuminate personal red flags before an offer is made to the employee.
Background checks may not legally be used to discriminate against candidates on the basis of race, color, national origin, sex, religion, disability, genetics or age, according to the U.S. Equal Employment Opportunity Commission.
Hiring organizations use credit checks on the premise that those who struggle to manage their financial resources and obligations may lack the responsibility and judgment to thrive in a job, especially a job where handling financial assets is a primary responsibility. In some roles that involve discretion or access to funds and sensitive information, companies may fear theft or embezzlement from job candidates who have a track record of financial irresponsibility. Again, the organization's purpose is not to be judgmental on moral grounds but rather to reduce risk by attending to probabilities.
Criminal background checks provide employers insight into the applicant's past behavior. Contrary to the image given by Hollywood, there is no flawless international database of criminal histories. Instead, most criminal background check companies provide their employer-clients with a range of services from targeted local checks to regional or national searches. In fact, in some areas, a criminal background check might involve a human from the investigation services company visiting a local county courthouse in person to request records. Many companies find it more economical to do a local or state level check, but that scope might not catch a criminal history from another state or municipality.
[Read: Things Your Boss Can't Legally Do.]
In recent years, social media activity has become an easily accessible source of information for employers. There are not yet many regulations that attend the use of social media in the hiring decision. Of course, an employer may not legally use information in a discriminatory nature during the hiring process. For example, if an applicant's social media activity seems to indicate an association with a certain sexual orientation, that insight may not be used to inform the hiring decision. If, on the other hand, the observed social media activity seems to indicate irresponsibility, say heavy drinking, or drug use, those insights are fair game. Before undertaking a job search, one should purge social media of any potentially controversial images or text, and privacy settings should be set to friends only. This advice also pertains to older social media accounts about which you may have forgotten, such as Tumblr or MySpace.
Not all companies and positions require the use of background checks. Companies find it a good investment to spend a few hundred dollars per candidate to avoid a problem hire. Job applicants need to know their rights and take prudent steps to ensure the accuracy of information about them and their backgrounds that will be revealed by these checks.
Recent Trends in Hiring and Background Checks
In the latest Getting Talent Back to Work Report from the Society of Human Resources Management and the Charles Koch Institute, about 66% of HR professionals surveyed said their company hired people with a criminal background -- the same percentage revealed in the 2018 survey; but the number of HR professionals who claimed their company had not hired people with criminal records decreased by five percentage points since 2018.
In December 2021, the federal Fair Chance to Compete for Jobs Act of 2019 will become law. As a result, most federal agencies and contractors will be prohibited from asking for criminal background information until a conditional offer is made. Then, there will be strict tests that will have to be met to utilize the information in confirming or withdrawing the employment offer. Similar laws are already in effect in many states and municipalities.
[READ: How to Professionally Handle an Uncomfortable Situation in the Workplace.]
This means that employers will want to make sure that their procedures for requesting and utilizing background checks are compliant with federal, state and local regulations. For job seekers, it will be important to be aware of the local rules to decide whether upfront disclosure of any criminal history is advisable or if it's a better strategy to wait and see. These rules largely apply to government workers and contractors, but many expect these new restrictions on the use of criminal background checks to extend deeper into the private sector over time.
Applicant and Employee Rights: What Limits Apply to Background Checks?
Employers must secure written permission from a job applicant to conduct a background check. Most applicants will not refuse to comply for fear of damaging their prospects. If, however, the employer cites any portion of a background check as the reason for not offering a job, the applicant has the right to request and receive a copy of the background check used. In that case, it will behoove the applicant to contact the investigating agency and correct any erroneous information.
Usually, companies that offer background check services are not allowed to disclose records that contain medical information. But divorce, bankruptcy and other life events can play havoc on background checks when the information is out of date or otherwise in error. Likewise, credit scores may be damaged from the activity of a current or former spouse.
[Read: 5 Leadership Styles for the Workplace.]
Hiring companies must use the tools of background checks in a fair and impartial way and may not apply the practice selectively based on age, ethnicity, sexual orientation or veteran status. If you suspect with good reason that background checks are being used selectively, you may wish to check with the EEOC in your area for further guidance.
Some organizations are committed to giving applicants equal and fair chances despite criminal history. Thorough research into company culture can reveal the relative attitudes about imperfect personal backgrounds.
