Conducting a background check: 4 things you need to know

As a business owner, you know how important it is to hire the right candidates. One way you can ensure you're selecting the best individuals is to use background checks. These background checks can help you narrow down the pool of candidates so you're looking to hire only the most worthy ones. However, you must keep in mind key aspects when conducting a background check to not only verify the candidate's credentials and experience but also protect his or her privacy. To help you navigate this path, keep these four things in mind.

Know what questions you can ask and when to perform the check.

Before you can even begin conducting the background check, you must be aware of the questions you're allowed to ask and when. You must adhere to the rules stipulated by the Equal Employment Opportunity Commission (EEOC) and Fair Crediting Report Act (FCRA). Various states also have specific laws and requirements regarding background checks. Head to your state's Department of Public Safety website to learn about the information you can collect.

Also, certain states only allow you to conduct background checks after you've extended a job offer. This law concerns the ban-the-box law instituted in a handful of states that prohibits employers from asking candidates about their criminal history on job applications. Also, some states prohibit you from asking during an interview or before you offer employment. Although many states don't have this law, it's better to make the job offer contingent upon a successful background check.

Certain states only allow you to conduct background checks after you've extended the job offer.

According to a survey from CareerBuilder, 74% of employers stated they've hired the wrong person for a position. These poor hires cost an average of $14,900 annually. When conducted correctly, background checks can help you weed out potential employees who might not be suitable for employment with your company. These background checks can give you the peace of mind needed that the person you're bringing on is truthful about his or her past.

It's always useful to consult with your legal counsel before beginning the background check to make sure you're asking the right questions. Develop a well-reviewed company policy that includes the information you can obtain. If you plan to perform ongoing background checks, make sure you include that information and possible causes for the checks in the policy.

Use a reputable background check company

You might be tempted to do a quick online search of the candidate, but it's best to avoid this practice. One of the main reasons is most of these sites aren't FCRA-compliant and state that you shouldn't use their information for background screenings. Using information gathered from these sites and deciding to dismiss a candidate from consideration could bring legal action against you. Instead, use a reputable background check company.

When selecting a quality company, use one that complies with the FCRA. Compliance with the FCRA is the responsibility of you and the company. Not following FCRA compliance can turn into a costly mistake that results in a lawsuit. The company should also hold accreditation from the National Association of Professional Background Screeners (NAPBS). Choosing a reputable company ensures the information you receive is supported and accurate.

The best background check company to use also depends on several factors involving your company, some of which include:

• Budget
• Background screening policy
• Business size
• Hiring volume
• In-house legal counsel
• Number of business locations
• Size of your human resources team

Every background check company has its own process. Once you hire a company, you'll likely need to log into a portal, fill out a few questions, and submit your request. The company might need 48 hours to several days to delve through all the information, depending on the amount of detail in your request and how many you submit. 

Let the candidate clear up any mistakes

Under FCRA regulations, candidates have several rights once you obtain their background check information. Before you can begin the background check, you must inform them of your intent to do so and get their permission in writing. Giving these candidates fair warning can help weed out applicants who know a background check might disqualify them from consideration.

After you've completed the background check, you can then determine if you want to hire the candidate. If you choose not to, you must allow them to review their background check results. They can then file a dispute with the company to resolve any issues.

Retain the background check information

According to the Federal Trade Commission, you must preserve any employment or personnel records you obtain via background checks for one year after creating the record or making the personnel decision, whichever occurs later. One reason you need to maintain the records for so long is if the applicant or employee files a charge of discrimination. You need these documents to help state your case.

If you're part of an educational institution for state or local governments, you must hold on to the information for two years, per the EEOC. Also, if you're a federal contractor who hires at least 150 employees and has a government contract of at least $150,000, you must keep the information for two years. Once that time frame passes, you must dispose of the information securely.

Related reading: Improving the candidate's hiring process

If you're new to background screening, make sure you know what to expect.

Use these tips to enhance the candidate's background check experience.

Learn how to make the most of the time between when the candidate is hired to the first day of employment.