Small Business Owner’s Guide to Background Checks

Good employees are valuable.  For small companies, making bad hiring decisions can mean the difference between staying in business, or not.  The prevalence of background checks on prospective employees continues to grow every year, and employers need to clearly understand the privacy rights of their applicants.

If you intend to run any credit reports on your prospective applicant, you need to be aware of the federal Fair Credit Reporting Act (FCRA), 15 USC § 1681 et seq., which is enforced by the Federal Trade Commission, as well as the California Investigative Consumer Reporting Agencies Act (ICRAA), Civil Code §1786 et seq. 

These laws cover any written, oral, or other communication, which includes any report made about a person by a consumer reporting agency that bears on the person’s credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.  This includes credit reports and investigative consumer reports such as interviews with neighbors, friends or associates made for the purposes of hiring, promotion, reassignment or retention.

How much information and the exact content of a background check is best determined by the type of job the hire will be doing.  If you’re hiring a VP of Finance, credit should be part of your check.  If someone is driving a truck for your business, you must run a driving record check.  In any case, but particularly when employees will deal with children, elderly or will be working inside someone’s home, a criminal record check is critical. 

The kind of information that can be accessed includes: credit history, criminal records, driving records, past employment verification, education verification, references, professional licenses, worker’s comp claims, medical history, and drug and alcohol screening.

Criminal records are held by each court system making them public records and available to anyone unless some restriction is imposed by a particular court.  What’s crucial to note is that, in the state of California, arrest records cannot be reported at all unless a conviction resulted, and convictions can only be reported for the last 7 years.  Third-party providers who do background checks are also required to send the applicant a copy of the report provided to the hiring firm.

It is possible to conduct your own criminal check, rather than hire an outside company, by requesting court records from each jurisdiction where the applicant may have lived.  This process, however, can take months to complete unless you are physically able to walk into the court where the records are located and pay the over-the-counter fee.  Keep in mind that some counties split felony and misdemeanor records.  And, there is always the issue of potential liability. credit repair company

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