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How to do Background Checks on Employees: Best Practices


If you are having second thoughts regarding undertaking background checks on your new employees, here are a few facts which would convince you.

The US Department of Law has indicated that if you hire few wrong people in your company, the effect of this hiring would show on the profits of your first year earnings considerably.

Recruiting a wrong person who has fudged his CV would make you spend $10,000 more for a middle level manager to $40,000 more for a senior management professional in your company.

You and your company can save all these unnecessary hassles and money, by undertaking background checks for your new employees.

Below we have explored the right way to undertake background checks and also analyzed if a background check can be undertaken without the employees permission.

background checks on employees

What are the Basic Steps Involved Here?

Undertaking the basic steps for background checks of an employee can be both simple and complicated in nature.

Here you have to understand that what are the basic checks that you are going to take and whether the background check procedure would be very extensive in nature or not.

The check procedure usually pertains to the type of job, the employee is undertaking in your company. The basic steps are simple and are explained below in detail:

Getting the written consent from the employee:

Nowadays 7 out of 10 companies undertake extensive background checks on their new recruits and these checks could be checks on their criminal records too.

The first step to take is, to ask the employee in the application form whether he is open for a background check, if he is recruited for the job.

In some jobs which pertain to childcare and geriatric services, a refusal for background check would disqualify the applicant for the specified job.

Identifying an agency to do background check for your company’s employee:

Most companies outsource the background check procedure of their new employees to third party companies.

But if your company has an in-house cell, you could use the National Crime Information Center and check if any of your new employees has a criminal background related to crime conviction or even an arrest.

Here it should be noted that only companies which deal with child or elderly services can use this system.

Contact the three credit bureaus and understand the credit history of the employee:

TransUnion, Experian, and Equifax are the 3 credit bureaus in USA. If you want to understand regarding the current credit history of your employee, then you have to use the various services offered by them for this purpose.

In case you do not want to contact these companies, you can use the services of a specialized company and receive customize data.

Check the employee references thoroughly:

When an employee is recruited in a new company, he gives employee references of his immediate boss and other superiors.

One of the best ways to confirm the work experience of a new employee is to check on the employee references.

Here a questionnaire email can be sent to the concerned people and this would help you to understand the job responsibilities and roles that he has undertaken in his last job.

In case there is discrepancy of data, this would indicate that your new employee might have fabricated details in his resume.

If your company is recruiting a large volume of new employees, the background check procedure can be given to a third party company.

Can an Employer Do a Background Check on an Employee Without Their Permission?

When discussing the topic of background checks on employees, a controversial question which is raised sometimes is “Can a employer undertake the background check of an employee without his permission?

The answer here would be that an employer can undertake background checks when he wants certain details which are important for the job and the data is sensitive data. Some of the areas are:

1. Credit History Check:

The employer can undertake and check the credit history of the employee and see if it has defaulted or has been declared bankrupt.

According to guidelines issued by Fair Credit Reporting Act, if the employee has been declared bankrupt 10 years ago, this detail would not be shared by the company.

The main aim of the employer here is to check how good the new employee with financial transactions is and whether he is honest or not.

2. Checking on the employees criminal history:

The National Retail Federation Security Survey in 2008 indicated that an average employee theft in USA was around $2,672.

Also Office of Applied Studies showed an alarming fact that, 75% of the current workers in USA are substance abusers and these people change up to 3 jobs in a year.

You as a company owner would not want to recruit such people. Thus you need to check the criminal history of a new employee.

In fact New Jersey is one state in USA, which allows verbal background checking of an employee to be undertaken, when he is taking an interview. States like California are more conservative in this issue.

Best Practices which can be maintained:

Employers should understand a simple fact that if you are extensively checking into employee personal sensitive details, the employer has the power to sue its employer. Thus a few best practices can be followed here which are:

  • Undertake background verification which is in accordance to the job profile. When recruiting security personnel, you need to check his criminal records. However if you have recruited a front office executive, you do not need to check the employees criminal data.
  • Always take a confirmation from the employee regarding background checks and also discuss with him what the areas which you would check in are. This would make the employee aware and if he refuses you can take the decision whether to hire him or not. In case you decide not to hire him, you have to show the report and the data which has made you take this decision. Here the employee can challenge the report if he feels he has been deprived of a good job and the data shared in the report is incorrect in nature.
  • The Americans with Disabilities Act ensures that the employer can ask the employee regarding his ability to do a specific job. However he cannot ask for medical records.
  • The guideline of GINA or Genetic Information Non-discrimination Act prevents an employer in USA from making decisions on hiring based on basic genetic data. Any type of genetic data should not be used by the employer when he is recruiting the new employee.
  • Basic data of military services like name, rank and duties can be disclosed. But these data is protected under Federal Privacy Act and special permissions and conditions are needed to acquire it.


The above article is a simple outline of how to background checks for employees and also understanding whether an employer can undertake these checks without the permission of the new employee.

Here we have to understand that the employer has to take the best decision and arrive at a possible solution which is best for both the parties.

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