Protect Yourself and Your Business with Background Checks
A friend once hired a guy who she thought was well qualified to be the COO or her rapidly growing company. Two years later a visit from the IRS revealed that her COO had been embezzling from her and not paying taxes.
As are many business owners, my friend was crazy busy and hadn’t taken the time to do a real background check on her new COO. It was a very costly mistake. Here are some tips and resources to get your background checking system up and running.
1. Know local law. States and counties vary on what is permissible with background checks. I’m going to offer advice that covers all situations as best I can, but before you implement a system for background checks do a quick consult with a local lawyer who specializes in this area. If you don’t want to pay a lawyer or bother reading the rest of this, skip to tip number seven.
2. Be consistent. When you have a system in place, apply it consistently for each job title. You may have different standards and processes for entry-level employees versus management, but within each job description use the same background check process.
3. Know how you can use public information. Social media profiles, bankruptcies and workers’ compensation appeals are public information. You may gain a glimpse into a candidate’s personality and lifestyle through social media, with the caveat offered in number six. You can use candidates’ workers’ compensation histories to judge their suitability if the previous cases indicate they wouldn’t be able to do the work. Bankruptcies, while they are public records, cannot be held against a candidate.
4. Criminal past rules vary. There is a trend against using the famous question, “Have you ever been convicted of a crime” on job applications. Court records are public records. Current federal law allows employers to consider convictions, but after seven years arrests cannot be considered. Note that your state may have different restrictions. California, for example, disallows arrest information unless it was followed by a conviction. You can get information on FBI services and checks on these two webpages:
5. General recommended checks. Credit checks, past employers, driving records, professional licenses, education, and references are the most common checks. Credit checks are used by about 60 percent of all employers. You need the candidate’s permission for a credit check and some states ban its use. Checking past employers will generally be limited to the basic facts surrounding employment.
6. Be wary of online searches. There’s a lot of information available on the Internet, but it is not consistent for every candidate – and it’s not always true, either. Finding negative information on one candidate and nothing on another, may just mean that the second candidate has managed to avoid the virtual world.
7. Consider using a professional service. Using a reputable service that has experience in your community can greatly simplify the process. You’ll get the consistency you need as well as conformance to current law. It spares you the chore of keeping up with federal, state and local changes in the law. If you want to go it yourself, keep tabs on this “Small Business Owner Background Check Guide” from the Privacy Rights Clearinghouse. So far they have done a good job keeping it updated and it seems to be quite thorough.
