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Types of Background Checks Employers Should Run

Kaylyn McKenna
Kaylyn McKenna
Business News Daily Contributing Writer
Updated Aug 03, 2022

Are you running the right types of background checks? Here are six types you should run on potential new hires.

  • Employers can use a number of background checks during the hiring process.
  • Background checks can help you verify credentials, minimize risk and improve your company’s hiring decisions.
  • You may be missing out on key information by not running the correct types of background checks.
  • This article is for small business owners and hiring managers who are interested in running background checks on prospective employees.

Background checks are a staple of most hiring processes. Running a background check gives you important insights into the person you are considering employing and can help you gauge whether they are a good fit for the position and your organization. 

Why employers should conduct background checks

Most employers conduct background checks; those who don’t may miss out on some key information about your possible new hires. Running background checks on new employees can serve a number of important purposes.

  • Verifying the accuracy of the candidate’s credentials: Background checks can help you identify misrepresentations, errors and omissions in the candidate’s reported credentials
  • Improving hiring decisions: You want to have all of the facts before you finalize your hiring decision. Someone may seem like a great fit, but if they misrepresented their credentials or experience, they may not actually be qualified to perform the work that you need done. 
  • Complying with legal requirements: There are a number of legal issues related to employment. Employers should know that the person they hired is eligible for employment in their region and field. Fines or lawsuits can occur if you allow an employee to perform work that they are not legally allowed to do. For example, if someone’s driver’s license is suspended or invalid and they injure someone while driving during work hours, you may be sued for negligence or face other consequences. 
  • Reducing risk: In addition to avoiding lawsuits or compliance issues, background checks minimize other forms of risk. For example, an employee with a poor credit history or criminal convictions related to theft may not be the best person to manage funds for your business. Someone’s online behavior or criminal history may also show that they are a high risk for workplace violence or harassment. Of course, past behavior is not always an indicator of future acts, but employers do need to minimize their risks where possible.

It can be difficult to keep track of all of the different types of background checks that you need to run, particularly as they may vary based on the requirements of the job. To help you sort through all your options, here is an overview of the six most important types of background checks for employers to use.

6 types of background checks employers should consider in the hiring process

Employers should always consider the specific needs and duties of a position when choosing which background checks to conduct. However, most employers will find that these six options will cover at least a good portion of their workforce.

Identity verification

Identity verification is one of the more basic forms of background checks. The purpose of identity verification is to ensure that the candidate is who they say that they are and that the identifying information provided, such as their Social Security number (SSN), is accurate. 

This form of background check is typically conducted for the purpose of legal compliance. Companies can be fined for employing people who are not authorized to work in the United States. If you don’t conduct identity verification or an SSN trace, you may not realize that an employee provided false information. There are also occasions when someone gives fake identification, such as using someone else’s license or credentials. This can result in an employer hiring someone who doesn’t meet the regulatory requirements for that role.

Identity verification also ensures that you get accurate results on the rest of the background checks you conduct. If you do not verify someone’s full legal name, date of birth (DOB) and SSN before running a background check, you may receive incomplete or inaccurate results, such as a criminal record that actually belongs to someone with the same name but a different DOB.

Criminal record checks

Criminal record checks provide employers with insights on an applicant’s criminal history. These background checks can show convictions related to a wide range of crimes.

It is important to be aware that you may need to run criminal background checks at the federal, state and local levels, as not all courts and localities share data. You should also understand the legal implications of using criminal records for employment decisions. Some regions have restrictions on how they may be used, such as San Francisco’s Fair Chance Ordinance.

MVR reports

Motor vehicle record (MVR) reports provide a record of the potential employee’s driving history. This is an important type of background check to run if a role requires driving. An MVR report will show information such as accidents, moving violations, license suspensions and other notable incidents. It will also show information about the applicant’s driver’s license, such as its expiration date, and whether they’ve held a commercial driver’s license.

Credit background checks

Credit background checks provide insight into a prospective employee’s credit history and financial standing. Credit background checks are popular for roles that incorporate financial duties or managing company funds. This is particularly true for roles in the banking industry, where the employee may be handling or accessing client funds in addition to the company’s assets.

It’s important to know that there are certain legalities associated with running credit checks during the pre-employment process. The Fair Credit Reporting Act (FCRA) regulates how employers may use the reports received. If you run a credit check and decide not to move forward in hiring a candidate, you need to give them the opportunity to provide an explanation or to fix any background check misinformation on their report.

Key TakeawayKey takeaway: You must follow FCRA requirements when conducting a credit check and taking action based on the report. Failure to comply with these regulations can have serious consequences for your company.

Education verification

Education verification is a type of background check conducted by employers to verify a candidate’s educational record and qualifications. The main objective of education verification is to confirm that the degree listed on their resume or the job application was obtained. Some employers go a bit further and verify an applicant’s GPA and honors earned.

Social media background checks

Social media background checks are a newer addition to the pre-employment background check lineup. A social media background check consists of a review of the prospective employee’s social media profiles and activity. Social media screenings are typically used to look for red flags in the candidate’s online activity such as hate speech or online bullying. Inappropriate or offensive behavior online, even on an employee’s personal accounts, can reflect poorly on the company and cause public relations issues. Such behavior can also be an indicator that the individual may harass others in the workplace. For example, posting racist, homophobic or sexist commentary online can indicate that the candidate does not align with your company’s values and might make other employees feel unsafe in the workplace.

The majority of background checks on this list are completed at the end of the hiring process, once an applicant has been identified as the top choice and an offer is anticipated if they pass the background checks conducted. It is important for employers to remember that this should also be true for social media background checks. While LinkedIn is a professional networking and job search tool and may be used during the hiring process, searching out more personal profiles such as Instagram, Facebook or TikTok too early in the process can contribute to unconscious bias from the hiring team. There is a natural tendency to feel favorably toward people who are similar to us, but you shouldn’t be interviewing someone because you like their fashion style or share the same hobbies or political beliefs, unless these traits are relevant to the role itself.

TipTip: In addition to acting as a background check, social media screenings can be a way for employees to showcase their skills for writing, content or marketing roles. While delving into personal profiles too early in the process can be problematic, feel free to review any professional profiles, blogs or personal websites.

How to conduct background checks

Most employers use a service to conduct pre-employment background checks. While some of the above checks can be done independently, it’s typically more time-effective to choose a background check service. This is especially true if you plan to conduct several of the above options on each employee. If you employ people in multiple regions, it can be especially difficult to stay on top of the regulations and local agency requirements related to requesting records. Finding the best background check service for your needs can also help you stay on top of compliance requirements and streamline the hiring process.

Image Credit:

Iamstocker / Getty Images

Kaylyn McKenna
Kaylyn McKenna
Business News Daily Contributing Writer
Kaylyn McKenna is a freelance writer specializing in business, tech, and leadership. She received her MA in Industrial-Organizational Psychology from Touro University, and enjoys using her industrial psychology background to share management, HR, and organizational effectiveness tips with small business owners. She has covered topics related to business law, compliance, employee retention, company culture, and management strategies.