Are Background Checks on Potential Employees a Necessity?

Many small businesses skip the background check process when hiring new employees.

But not taking this important step can cause you major headaches -- and even leave you open to liability.

Here are a few reasons you should consider implementing background checks on all new hires, and how to go about it:

First impressions can be deceiving

A job applicant can put on a friendly, intelligent, and hard-working face for an interview. But how do you know this is the person's true personality, or if it's just an act?

A friendly face can mask a host of problems, including fraud, theft, or just a poor work ethic.

A background check might not turn up everything, but it might give you a much more accurate picture of the kind of employee this person will be.

Background check can uncover red flags

Even if an employee has committed fraud at a previous job, his or her record might be clean.

But talking to previous employers and running a thorough check can come up with details about the worker's character and temperament -- things that may not show up during an interview.

You might be held liable if you don't run a check

If the position for which you're hiring will require interaction with the public or direct contact with clients, a background check is a necessity.

You will be liable if the employee does harm to a customer and it turns out he or she had similar trouble in his or her work history.

You might get a break on insurance

Your business insurance provider may give you a discount if you perform background checks before hiring employees.

Insurers provide this incentive because it limits the risk of hiring someone who ends up causing a lawsuit against your company.

Follow the rules for a legal background check

The Fair Credit Reporting Act (FCRA) protects a job seeker's privacy rights, and also protects them if an employer makes a hiring decision because of inaccurate data in the background check. Before running any background checks, make sure you fully understand the rules under the Act.

You'll have to ask the job candidate's permission to run a check (though you can tell the candidate he will be taken out of consideration if he refuses the background check).

If you uncover negative information in the employee's background, and it is the basis for you not giving her the job, you are required to tell her what source you used for the background check. For this reason, you should find a reputable vendor to perform your background checks for you.

You may be lucky enough to hire employees for years without having any serious trouble, but it only takes one dishonest worker to cause you major financial or legal troubles.

Running a background check now can save you major headaches later, and will help ensure that your business keeps running smoothly.

About the author

Freelance blogger Angie Mansfield covers a variety of subjects for small business owners. From business growth to marketing to management, her work will give you tips to keep your business running smoothly.


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