Background and Reference Checks

Introduction
Several types of background checks may be conducted on applicants for a position. Each type of background check is subject to federal and state laws that govern when and how an employer may conduct a check. Some general guidelines include:

• Establish and document a standard policy for conducting background checks on applicants and employees. Be sure to document if checks will only be conducted in certain instances or for particular positions.
• Only conduct the background checks that are necessary for the particular position, or ones that would be necessary to refute a negligent hiring claim. For example, if a position does not require handling money or expensive equipment, it may not be necessary to run a credit check to screen applicants. On the other hand, if the position requires access to tenants' units, a criminal background check may be prudent.
• If conducting background checks without the use of a third-party, it is prudent to document all steps taken and the results during the background and reference check process. Include details about who was contacted, what information was provided, and what information (if any) was requested but not received.
• Inform applicants in writing of the background checks that will be performed. Get their permission in writing when required by law.
• Civil rights laws may apply when using background checks in hiring or promotion decisions. Certain types of checks may have adverse impacts on protected groups. It is wise to consult a specialist in employment law when instituting a background check policy.

Types of Checks that Exist

Reference Checks
Before a final hiring decision is made, it is important to check the applicant's references. Some firms may check out every detail of an applicant's education and work history; others may rely more heavily on personal references and a check on the most recent one or two positions held. At a minimum, it is important to verify the most recent employment. Before checking references, an organization should obtain a signed release from the candidate indicating that the organization may seek confidential information from present and former employers and other sources. Letting the candidate know early in the process that reference checks will be conducted allows them to line up cooperative references and alert them of the potential reference request.

Telephone reference checks take less time and are often more productive than written requests. Start by verifying the basics: employment dates, title, job duties, reason for leaving, and salary. Legal issues have made some employers reluctant to provide more than these basic facts. However, if the reference seems receptive, ask about the candidate's strengths and weaknesses, how well the candidate works with others, and about the candidate's work ethics.

Criminal Background Checks
The laws regarding the use of criminal background checks vary from state to state. There may be restrictions on inquiries about arrests, convictions from the past, juvenile crimes, sealed records, relevancy to the job, or specific positions. Justification for obtaining conviction records may be based on the type of position being filled or information obtained from other steps in the screening and background check process. Obtaining arrest records, however, is rarely permitted. A number of states have laws that grant applicants and employees certain protections against criminal disclosure based on privacy concerns.

A business should consider doing criminal checks on applicants who will:

• Have access to money or valuables
• Carry a weapon
• Drive a company vehicle
• Have access to certain materials (explosives, chemicals)
• Have access to master keys
• Have a lot of contact with the public, patients, or children

In addition to privacy and anti-discrimination laws, a business faces liability for not conducting adequate checks. Some positions require a criminal background check under state law. In order to obtain conviction records, a business may contact the appropriate state, county, and/or local agencies directly, hire a private agency to conduct the checks, or order reports from a private service provider online. It is advisable to engage a company that specializes in performing background checks on job applicants, making sure that the company is licensed if required in your state. Primary responsibility for accuracy of reports and compliance with the law lies with the company performing the check.

Credit Checks
An organization may want to run a credit check if the position for which they are hiring requires handling large sums of money or exercising financial discretion. In addition to identification information such as the applicant's name, address, and social security number, a credit report will include:

• Bankruptcies
• Tax liens
• Judgments
• Child support obligations
• Loans

Federal laws generally provide more protection for employees and applicants than state laws. However, there may be specific state laws that apply. The CCH Business Owner's Toolkit Web site lists a summary of state law credit report provisions.

Under the Fair Credit Reporting Act (“FCRA”) employers must get an employee's or applicant's written consent before seeking their credit report. This disclosure and authorization must be a separate document – not part of the job application. Employers may use the credit report as a factor in hiring decisions; however they may not discriminate against an applicant solely because of a bankruptcy in their history. Also, if an organization decides not to hire someone based on their credit report, they must provide the applicant a copy of the report and inform them of their right to challenge the report. Credit reports must be kept confidential and should not be kept in an employee's personnel file.

Driving records
If a position, such as a delivery driver, requires driving a vehicle on company business an employer should check the applicant's driving record. This information is available from a state's Department of Motor Vehicles. The records usually include traffic violations and related offenses.

Timing and the Time Required to Complete the Check
The turnaround time for a criminal background or sex offender registry check is usually one to five days. An initial drug test can be completed as quickly as the same day, if the test is conducted at a laboratory, to a week or more, if the test specimen must be sent to a laboratory for analysis. Credit reports, tenant screening, or other consumer reports can usually be received online, or by fax, on the same day.

The timing of background checks in the application/hiring process is important. First, written authorization from the applicant should be obtained for criminal background checks and credit report checks. Job application forms can include statements to inform the applicant if you will be conducting background and reference checks, but some laws require disclosure to be written separately.

Second, because all types of background checks entail some cost, usually per applicant, it is unusual to conduct checks on all initial applicants – most employers choose to conduct checks only on the candidates that have completed other screening processes.

More Information
The Substance Abuse and Mental Health Services Administration
The Substance Abuse and Mental Health Services Administration's Division of Workplace Programs offers a great deal of information about drug testing in the workplace.

The CCH Business Owner's Toolkit
This online resource discusses general guidelines for all types of background checks. Geared for the small business owner, but the discussion of legal issues applies to all organizations.

Nolo.com
This site offers basic guidelines regarding the legal issues involved with employee and applicant background checks.

CASAnet Resources - Statewide Criminal Background Check Resources
This list of state resources for criminal background checks was compiled by the National CASA (Court Appointed Special Advocates) Association.

The Department of Labor's Drug Free Workplace Advisor

“Most firms now use background checks”
MSNBC article about the prevalence of background checks in hiring.