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From disrupting office dynamics to exposing your company to legal liabilities, a bad hire can negatively affect your small business on many levels.
As a technical recruiter, I've seen how the wrong hire can derail a small business. While resumes kickstart the process, they're not foolproof—a staggering 56% of job seekers admit to lying on their applications. This is where background checks become crucial.
These checks protect your company, your team, and your bottom line by revealing potential issues before you extend an offer. Don't let a deceptive resume or hidden red flag cost you time and money.
I'll guide you through implementing effective background checks to ensure you build a trustworthy, high-performing team.
» Need to verify a candidate's details? Check out our top reverse phone lookup sites.
Why Use Background Checks Before Hiring
The main purpose of a background check is to verify information. It's easy to cheat a background check by slipping a few keywords into your resume. That's why you must ensure the candidate possesses the skills and experience they claim to have. Here are a few other reasons to thoroughly research potential candidates:
Mitigates Hiring Risks
Background check services like Intelius offer key benefits in risk mitigation. These providers increase confidence in hiring decisions and protect your company, employees, and reputation.
Furthermore, background checks reduce legal risks from poor hiring choices. Employers lose 72% of negligent hiring lawsuits, highlighting the importance of thorough screening.
Enhances Workplace Safety
Did you know that up to 30% of business failures may come from employee fraud and abuse? Background checks can help weed out high-risk candidates with histories of violence, theft, or fraud. This can help you build a reliable, productive, trustworthy team while creating a safer work environment for all employees.
Confirms Candidate Credentials
Verifying a candidate's qualifications, work history, and education improves workplace safety and team cohesion. This process ensures you hire truly knowledgeable and capable individuals who will boost your team's productivity and success.
To gain deeper insights, you can use a platform like Truthfinder to examine a candidate's social media presence. This may reveal discrepancies in their resume and offer a more comprehensive view of the applicant.
How to Develop a Background Check Policy
A well-crafted background check policy streamlines hiring and protects your company from potential risks. Consider these key elements and employee background check best practices when creating your policy:
- Define the purpose: Clearly state why you conduct background checks. Focus on verifying qualifications, skills, and job suitability rather than unnecessary personal details.
- Tailor checks to positions: Outline specific checks for different roles. Consider criminal records, employment history, education, and professional licenses as appropriate.
- Ensure fairness: Apply the policy consistently to all candidates to avoid discrimination. Establish clear guidelines for evaluating and interpreting results.
- Get consent: Detail how you'll notify candidates about background checks and secure their written permission. This protects your company legally.
- Protect data: Implement procedures for secure collection, storage, and disposal of candidate information gathered during checks.
- Stay compliant: Ensure your policy adheres to relevant laws and regulations, including fair hiring practices and data protection requirements.
- Train staff: Provide thorough training to employees involved in the background check process to ensure consistent and proper implementation.
- Review regularly: Schedule periodic reviews of your policy to keep it current with changing laws, industry standards, and company needs.
» Understand the seven levels of background checks you can use.
Legal Essentials for Background Checks in Small Businesses
When screening potential employees, small business owners must navigate legal requirements carefully. Here's what you need to know:
- Consent requirements: Always ask candidates for permission before running a background check. This protects your business legally and maintains transparency.
- Protect personal data: To protect candidate data, use strong passwords and encryption, limit access to necessary staff, securely store and dispose of information, and train employees on properly handling sensitive data.
- Know your local laws: Many areas have "fair chance" or "ban-the-box" laws. These rules may limit when you can ask about criminal history, giving candidates a fair shot at employment.
- Avoid discrimination: The Equal Employment Opportunity Commission (EEOC) prohibits hiring decisions based on race, religion, gender, or national origin. Evaluate all candidates fairly.
- Stay informed: Keep up with changing state and federal laws regarding background checks in your area.
» Check out the best free and paid reverse email search sites.
Types of Background Checks
Using different types of background checks can help you understand the candidate holistically. Consider combining and incorporating the following types of checks in your process:
Criminal History Checks
When running a criminal background check, choose a trusted screening service that follows legal guidelines. Small businesses can try an affordable option like Answer Lady. Look at convictions, not arrests, and think about how serious the offense is and if it matters for the job.
For instance, a drunk driving conviction might not be a big deal for an accountant working in an office, but it would be for someone who drives for work.
Employment Verification
Go beyond simply confirming job titles and dates. Contact previous employers for insights into the candidate's work ethic, team dynamics, and ability to handle specific challenges relevant to your business.
For example, if you're a marketing agency, ask about the candidate's experience managing client relationships or meeting tight deadlines. This process can uncover valuable information not apparent on a resume.
Education Verification
When checking education credentials, contact schools directly or use a service like BeenVerfied. This is crucial for roles needing specific qualifications, like IT or healthcare positions. Be aware that some candidates might exaggerate their experience.
Smart interviewers use education verification tips beyond just checking paperwork. During interviews, casually ask candidates how they've applied their degree in previous jobs or discuss relevant coursework. This can help you verify their claims while assessing their practical knowledge.
Professional License Verification
For jobs needing special licenses, like nurses or electricians, ensure the candidate's credentials are valid and up-to-date. Check with the relevant licensing board to see if there's any history of problems. This protects your business and keeps you in line with industry rules.
Motor Vehicle Record Checks
If you're hiring someone who'll drive for work, like a delivery person or sales rep, check their driving record. Look for recent tickets or accidents that might raise red flags on background checks.
A clean record usually means a responsible driver, which is safer for your business. Consider how serious any violations are—a speeding ticket from five years ago might not be as concerning as a recent reckless driving charge.
Challenges of Performing Background Checks
Cost Constraints
The cost of background checks is a major factor for small businesses. Professional checks can range from $18 to $35 per candidate, straining tight budgets, especially when hiring multiple positions.
US Search is ideal for small businesses looking for a cost-effective solution. Its plans start at just $14.95/month and include reverse phone and email lookups. The platform can give you all the data you need to qualify and understand potential hires without breaking the bank.
Screening Delays
You might lose great candidates during lengthy background checks. These screenings often take weeks, giving your competitors a chance to snatch up talent. That's why you should be up-front about any pre-employment screening delays.
Your transparency and communication will help keep top candidates interested, even if the background check takes longer than ideal. However, if you're in a rush to fill a position quickly, InstantCheckmate can provide a quick turnaround of 12 minutes.
Legal Compliance
Legal compliance in background checks can challenge small businesses without dedicated HR departments. Smaller teams often struggle to keep up with evolving federal, state, and local regulations. However, failing to comply can expose your business to costly lawsuits or fines.
To protect your business, consider consulting with an employment lawyer or using a reputable background check service like PeopleFinder that stays current on regulations.
Small Business Hiring With Peace of Mind
For small businesses, background checks are more than just a hiring formality—they're a vital tool for protecting and growing your company. While the process may require some investment of time and resources, it's far less costly than the potential risks of a bad hire.
By carefully vetting candidates, you'll build a foundation of trust and competence to support your business as it grows.
» Find out why you need detailed background checks when hiring executives.
Written byDustin Villepigue
Dustin contributes to Top10.com as a seasoned technical recruiter. By drawing from his experiences with tech giants like Lyft and Google, he offers insights into effective background checks and the importance of secure hiring practices.