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Choosing a Background Check Service: A Buying Guide for Businesses

Choosing a Background Check Service: A Buying Guide for Businesses
Credit: Fotogestoeber/Shutterstock

Looking for a background check service in 2018? Here's everything you need to know about the different types of services, what each offer and how to choose one. If you already know what you're looking for, visit our best picks page to see which ones we recommend, as well as a complete list of others that might work for you.

When you're choosing a background check service, the first question to ask is, what kind of service do you want to use? There are two distinct types:

  • Full-service background check companies that do all of the investigation work for you.
  • DIY background check websites that provide instant results and allow you to conduct online searches on your own.

Here are more details on each type.

  • Pre-employment background check companies offer a comprehensive screening solution.
  • The providers do all of the research for you. They search online databases and make in-person courthouse visits to check for criminal history. They can also verify past employment and education, as well as dig into a variety of other areas of a candidate's background.
  • The specific types of screenings employment background check services conduct include the following:
  1. Misdemeanor and felony criminal records searches at the county, state and national levels
  2. Sex-offender status searches
  3. Social Security number traces and validations
  4. Employment verifications
  5. Education verifications
  6. Professional license verifications
  7. Reference checks
  8. Credit report checks
  9. Civil records checks
  10. Motor vehicle records checks
  11. Military records verifications
  12. Workers' compensation history searches
  13. Health care sanction checks
  14. Address history checks
  • These companies abide by the Fair Credit Reporting Act (FCRA), which governs how background checks must be conducted. This includes requiring the job candidate's consent to conduct the background check and giving the candidate the opportunity to review the final results.
  • Most companies use a cloud-based system that allows employers to request background checks and review finished reports online.
  • Full-service companies typically charge $50 to $100 per report and take between two and five days to complete the search process.

Pros and cons: The biggest benefit of using these companies is that they comply with FCRA laws. Using services that don't abide by these laws leaves your business vulnerable to lawsuits and fines. Another advantage is that these services don't rely solely on information found online; they visit courthouses, and contact past employers and educational institutions. The biggest downsides of these services are the cost and time they take to complete the search process.

What the experts say: In addition to providing a much higher level of professionalism and integrity than online search engines, full-service background check companies conduct much more thorough searches, said Mike Aitken, vice president of government affairs for the Society for Human Resource Management.

"Outside entities not only, in most cases, do electronic searches; they also go right to the source," Aitken told Business News Daily. "They actually do research and [personally] search the jurisdictions."

Editor's note: Looking for information on background check services? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need:

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Our best picks include three full-service background check services and one online background check service. See the box below to understand the difference.

Credit: Anita Rahman
  • Online background check websites are cheap and simple to use.
  • After entering the name of the person you are searching, you are instantly provided with a variety of details, including the following:
  1. Misdemeanor and felony criminal convictions
  2. Sex offenses
  3. Details on arrests and plea deals
  4. Bankruptcies
  5. Civil legal judgments
  6. Address history
  7. Marriage records
  8. Social Security number verification
  9. Social network profiles
  • The majority of DIY websites are not FCRA-compliant and have specific language in their terms of use stating that they are not to be used for pre-employment screening.
  • Costs run $10 to $50 per background check, depending on how much information you want to look at.

Pros and cons: The biggest advantage of these websites is that they provide instant results for a very low cost. They also allow you to do the searching on your own. The downsides are that they are not FCRA-compliant, often provide incomplete or error-filled results, and do not include education or employment verification services.

What the experts say: Sean Bigley, an attorney whose law practice focuses entirely on background investigation issues, said businesses that use do-it-yourself websites for pre-employment background checks do so at their own risk.

"It is worth noting that much of the information on these websites is wildly inaccurate, thereby limiting the utility of the process anyway," Bigley said. "Given the wealth of information available on these websites, I can also foresee claims of age or race discrimination."

With so many background check services out there, it can be difficult to know which one is right for your business. Our experts highlighted a number of things you should look for when shopping for a service:

  • Does it have the ability to find all of the information your business needs to make your hiring decisions?
  • Does the service comply with and understand the Fair Credit Reporting Act?
  • Are the costs reasonable?
  • Is there an online portal where you can place orders and review results?
  • Does the service provide you with the necessary authorization forms for job candidates to fill out? Does it go a step further and offer electronic consent forms that can be signed digitally?
  • How long does it take to get results?
  • Does it provide clear, accurate and complete written reports?
  • Is the company accredited by the National Association of Professional Background Screeners?

Now that you know the basics, you might be ready to make some decisions. If so, check out our best picks for background check services.

Still not sure if you even need to conduct background checks or which type of service is right for you? Here are some questions and answers that might help you come to a decision.

Q. Why should I conduct pre-employment background checks?

A. Businesses that don't use background checks when hiring new employees are putting themselves at risk. When a new employee who hasn't been properly vetted is hired, employers are basically welcoming a stranger into their business.

"That stranger has access to your customers, your cash, your IT – everything," said Lester Rosen, founder and CEO of Employment Screening Resources.

He said hiring someone solely based off how they come across in an interview is a recipe for disaster.

"It would make as much sense to do that as it would to walk down the street and give the keys to [your] front door to a total stranger just because when you talk to that stranger, they look good or sound good," Rosen said.

Q. Background checks seem more useful to large businesses. Do small businesses need to conduct background checks?

A. Small businesses have just as much, if not more, to lose from a bad hire. Bringing in someone with a criminal past who steals from the company or puts co-workers in danger could end up putting a small organization out of business for good.

A study from HireRight, a pre-employment screening firm, found that 73 percent of small businesses conduct background checks when making new hires.

Q. Does conducting background checks send a message to potential hires that you don't trust your employees?

A. Running background checks doesn't mean you are assuming everyone who applies for a job at your business is a bad person.

"The idea is that, as they used to say in politics, 'You want to trust, but verify,'" Rosen said. "You want to hire based on information, as well as instinct."

Q. Do background checks give any insight into what type of employee the candidate will be?

A. Although a simple background check might not tell you how hard job candidates would work if hired, it can give some insight into their character by giving you an idea of how much you can trust them.

"It can be a red flag to the employer if the person is being less than honest [on their resume or job application]," Aitken said.

Q. How many businesses actually find a red flag when conducting background checks?

A. A separate HireRight study revealed that 85 percent of employers have found applicants who lied or misrepresented themselves on their resume or application.

Q. If a background check turns up a criminal record on a potential candidate, can you immediately eliminate that person from consideration?

A. Mark Briggs, of the Arizona-based Briggs Law Group, said that to disqualify a candidate from consideration because of a criminal history, employers must have a clear connection for why someone's criminal record makes them unfit for the job for which they are applying.

"For example, having five speeding tickets in the past two years may be a valid reason to not hire a delivery driver, but their misdemeanor vandalism conviction 10 years ago probably is not," Briggs said. "If the employer has inappropriately relied on something like an arrest report to deny an applicant a job, they can be in big trouble." 

Q. What is the purpose of running a credit check on a potential employee?

A. Credit checks can provide an overall financial picture of a candidate. However, they should be considered only for candidates applying for roles in which they would handle large amounts of money or assets, such as a chief financial officer, according to Aitken.

"They aren't trying to play 'gotcha' and say, 'They fell behind once or twice on their credit card payment or have an outstanding student loan debt,'" Aitken said of why a credit check would be conducted. "It is to check their overall ability to meet their financial obligations."

You can read more about conducting credit checks on employees here.

Q. Do you need a different type of background check service depending on your industry?

A. It depends on the background check service. Some services have a comprehensive selection of screenings that cover a wide range of industries, while others are more limited or specialized in what they offer.

There is really only a handful of industries where standard employee background checks might not suffice. For example, those in the health care industry need to conduct some additional types of searches. Another is the transportation industry, which often requires a more extensive look at a candidate's driving record.

When you're choosing a service, it is important to talk with the background check provider to make sure it conducts all of the screenings your business requires.

Q. What does it mean for a background check service to be accredited?

A. The National Association of Professional Background Screeners (NAPBS) offers background check services the ability to participate in the Background Screening Agency Accreditation Program.

"The NAPBS accreditation program is widely recognized as a seal of approval due to its commitment to achieving excellence through high professional standards with accountability that results in continued institutional improvement," said Melissa Sorenson, executive director of the NAPBS.

The accreditation program reviews background check providers on several key areas:

  • Consumer protection
  • Legal compliance
  • Client education
  • Researcher and data product standards
  • Verification service standards
  • General business practices

Sorenson said that to become accredited, background check services must demonstrate initial and ongoing compliance with the accreditation standard prepared by the Background Screening Credentialing Council.

"Compliance is demonstrated through rigorous desk and on-site audits, all of which are completed by an independent third-party auditor," Sorenson said. "Firms must document each of their policies and processes as required in each of the areas within the standard and demonstrate visible compliance with their policies to the auditor."

Accreditation lasts five years. To remain accredited after that, the company must repeat the review process.

Q. With the popularity of social media, shouldn't part of the background check include examining job candidates' social network accounts?

A. Although employers might be tempted to check out a candidate's Facebook or Instagram page to learn more about his or her judgment and character, they could be opening themselves up to lawsuits by doing so.

"An employer might learn from a person's Facebook page that they belong to a particular religious group or have a disability that is not visually apparent," Briggs said. "Knowing that information can open up an employer to liability, because they are not allowed to ask about those things in an application or interview for a job, and once you know something, you can be accused of considering that information illegally when making the hiring decision."

Jonathan Segal, a partner at Duane Morris LLP in the employment, labor, benefits and immigration practice group, said that to limit the potential for a hiring lawsuit when conducting social screenings, businesses need to provide their background check service provider with clear guidelines.

He said you should tell the background check firm what type of information you are looking for and, more importantly, what you are not looking for, such as medical or personal information.

You can read more about the pros and cons of using social media as part of the background check process here.

Q. Do I need to conduct background checks on any of the freelancers or temporary workers I hire?

A. Mary O’Loughlin, managing director of Healthcare at HireRight, said since many contingent workers are granted the same type of access to company facilities, data, other employees and customers as full-time employees, they should be screened in the same way.

"Best practice is that you should be screening your contingent laborers with the same level of diligence that one would screen employees who have the same responsibilities," O’Loughlin said.

The HireRight study shows that screening temporary workers has become commonplace for many organizations. Specifically, 86 percent of employers now screen contingent workers before hiring them for any assignment, up from 45 percent in 2012.

"Employers are increasingly becoming aware of the risks that unscreened contingent labor can bring, and they want to ensure that this workforce has the same job skills and background as their employees," O’Loughlin said.

When screening contingent workers, it is important to still follow all of the FCRA laws, according to O'Loughlin.

"Best practice is to screen all freelancers who you directly employ in the same way you would screen an employee, including FCRA laws and state regulations," she said. "For contingent laborers that are not direct employees, employers should work with their contingent labor firm to set the specific background screening and decision guidelines that they want applied to any contingent laborer within their contract." 

Q. What penalties do you face if you don't follow the FCRA background screening laws?

A. The two biggest repercussions of not following the laws are being sued by a job applicant and being investigated and possibly fined by a government agency, such as the Equal Employment Opportunity Commission or the National Labor Relations Board.

"Defending against a government investigation or lawsuit is time-consuming and expensive," Briggs said.

Q. Is it really worth it to spend money on a full-service background check company when I could just as easily do an online search on my own for a fraction of the cost?

A. There is great danger in doing just a haphazard online search, Aitken said. The information you come across might not be accurate or complete. In addition, the information might not be relevant to the job. Making hiring decisions based on those factors could come back to hurt you in the long run.

"Yes, there is a cost, but there are ways to structure that to make it more affordable," Aitken said. "This is just part of the investment into making a good hire."

If you think a background check service or website is best for you, we encourage you to check out our best picks page to see the providers we think are best for various types of businesses, our reasoning for picking each, and a comprehensive list of background check services and websites.

Editor's note: Looking for information on background check services? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need:

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Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.