Guide to Background Checks for Employees and Tenants

Whether you’re hiring a team member or leasing your property to a tenant, due diligence helps protect your organization, assets, and reputation.

This guide explores everything you need to know about employee background checks and tenant background checks in 2025, including how to conduct them, what to look for, and how to choose a reliable partner.

Employee Background Check vs. Tenant Background Check

Understanding the difference between an employee background check and a tenant background check is essential. While both aim to reduce risk and validate the integrity of an individual, the focus and depth of these screenings differ significantly.

What Does an Employee Background Check Show?

An employee background check can uncover a wealth of information. Depending on your industry and needs, you can check:

Criminal history: National and local records for felonies, misdemeanors, and infractions
Employment verification: Confirmation of previous jobs, titles, and dates of employment
Education verification: Validation of degrees, diplomas, and certifications
Credit reports: Especially relevant for roles involving financial responsibility
Professional Licenses: Verification of relevant licenses and expiration dates
Drug screening: For safety-sensitive positions

What Does a Tenant Background Check Show?

A tenant background check, while similar in structure, emphasizes different criteria, such as:

Rental history: Past evictions, late payments, or lease violations
Credit report: Insight into financial responsibility and risk
Criminal record: Nationwide and county-specific criminal checks
Income verification: Pay stubs or employment letters
References: Feedback from previous landlords

Legal Requirements

Regardless of which type of background check you’re conducting, there are legal requirements that you must follow. Failing to do so can put your business at considerable risk, including fines, penalties, and lawsuits.

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) governs how background checks are conducted by third-party screening companies. It applies to both employee and tenant screenings. Key provisions include:

Written consent: You must obtain written permission from the individual before conducting a background check.
Disclosure: A clear and standalone disclosure must be provided, informing the subject that a background check will be conducted.
Pre-adverse and adverse action notices: If you decide not to hire or rent based on the report, you must provide the individual with a copy of the report, a summary of their rights, and a chance to dispute inaccuracies before making a final decision.

If you plan to do any type of investigative report, there are additional requirements. For example, with a report using personal interviews about someone’s character, general reputation, personal characteristics, and lifestyle, you must let them know they have a right to a description of the nature and scope of the investigation.

Equal Employment Opportunity Commission (EEOC) Guidelines

For employee background checks, EEOC guidance is critical to ensure the screening does not result in discrimination. Employers must:

Apply criteria consistently: Screen all applicants for a position in the same manner.
Assess criminal history fairly: Consider the nature of the offense, its relation to the job, and how much time has passed.
Avoid blanket policies: Policies that automatically disqualify individuals with criminal records may be considered discriminatory unless they are job-related and consistent with business necessity.

As the Equal Employment Opportunity Commission (EEOC) puts it: “…any time you use an applicant's or employee's background information to make an employment decision, regardless of how you got the information, you must comply with federal laws that protect applicants and employees from discrimination. That includes discrimination based on race, color, national origin, sex, or religion; disability; genetic information (including family medical history); and age (40 or older).”

Fair Housing Act (FHA)

For tenant background checks landlords must adhere to the Fair Housing Act (FHA), which prohibits discrimination.

Key provisions are:

Non-discrimination in housing: Landlords cannot refuse to rent or sell property based on race, color, religion, sex, national origin, familial status, or disability.
Reasonable accommodations for disabilities: Landlords must make reasonable changes to policies or structures to ensure equal access for tenants with disabilities.
Protection against unfair practices: Landlords cannot mislead tenants about housing availability, impose unfair conditions, or create a hostile environment through harassment.

State and Local Laws

Beyond federal laws, many states and municipalities have additional requirements. While you should check with a labor attorney to ensure you comply with all legal requirements, here are a few common regulations you may encounter.

Ban-the-box Laws

According to the National Employment Law Project, 37 states, the District of Columbia, and more than 150 cities and counties have fair chance policies, more commonly known as ban-the-box.

In some cases, you cannot ask about criminal history on an application and may not be able to run a criminal background check for an employee until you’ve extended an offer. You’ll want to check your state and local laws carefully to be compliant.

Salary History Bans

A more recent trend is states and jurisdictions that make it illegal to ask about prior compensation. In most cases, it’s illegal to refuse to hire or interview someone just because they won’t provide you with their pay history.

You can still conduct an employee background check, but you may not be able to ask previous employers about prior compensation or use any information you uncover as part of your hiring decision.

Tenant-Specific Laws

There may also be limits regarding what kind of information landlords can consider or require from tenants. These vary widely depending on location, so you’ll want to get a legal opinion to protect yourself.

How to Do a Background Check on a Tenant

Conducting a background check on a tenant is straightforward. Here are the key steps.

1. Obtain Written Consent

Getting written consent from the applicant is a legal requirement under the FCRA and also helps establish transparency and trust between both parties. Consent forms should be standalone documents and clearly outline that a background check will be performed.

2. Collect Necessary Information

To run a comprehensive background check, you will need to gather several key pieces of information. These include the applicant’s full legal name, Social Security number, date of birth, current and previous addresses, employment details, and possibly references.

Ensure the information is accurate and legible to avoid delays or errors. Verifying the information is important to avoid scams and make sure you’re actually dealing with who they represent themselves to be.

3. Use a Screening Service

Engage a reputable screening company that complies with the FCRA. Online tenant screening platforms can provide fast and reliable data, including credit history, eviction records, and criminal background. Make sure the service you choose offers comprehensive reporting and adheres to local and federal regulations.

4. Review the Report

Examine the report closely for red flags. Look out for prior evictions, late rent payments, poor credit scores, criminal history, or discrepancies in employment and income. Context matters, though. A missed payment years ago may not be a deal-breaker, but a history of repeated infractions could be.

5. Comply with Housing Laws

If you decide to reject an application based on a background check, you must follow legal procedures. This includes issuing an adverse action notice, which explains the decision and provides a copy of the report along with a summary of the tenant’s rights. This gives the tenant a chance to dispute any incorrect information.

How to Do a Background Check on an Employee

A background check for a job applicant or employee is a multi-step process to make sure hiring decisions are fair and compliant. Here are the key steps:

1. Notify the Applicant and Get Written Consent

As with tenants, the first step in employee screening is obtaining the applicant’s explicit written consent. The notice must be clear, in a separate document, and state that a background check will be conducted.

2. Determine What to Check

Decide which components of the background check are relevant for the position. For example, a job that involves driving should include a motor vehicle report, while a finance role might warrant a credit history check.

Tailoring the scope of the background check to the job ensures efficiency and relevance.

3. Gather Information

You should have a standard job application that requests the information you need for the background check. Because there is a wide variety of laws that apply to your forms, you should have a labor lawyer check them to ensure compliance.

You’ll need to collect name, address, Social Security number, and other key facts to start the process. Make sure you verify individuals. This has become increasingly difficult in today’s remote hiring environment. There are plenty of stories about to try to get hired.

4. Select a Compliant Provider

Choose an employee background check service that offers employee background check services and fully complies with FCRA and EEOC regulations. Many online employee background check services offer customizable packages depending on your industry and hiring needs.

5. Analyze the Findings

Once you receive the report, consider the severity, relevance, and recency of any issues. An isolated incident from years ago may be less concerning than a pattern of misconduct.

6. Follow Adverse Action Protocols

If the results lead you to consider not hiring the individual, you must initiate the adverse action process in this case, too. This includes issuing a pre-adverse action notice with a copy of the report and a summary of rights under the FCRA. After a waiting period, you may issue a final adverse action notice if the decision stands.

How to Choose a Background Check Company

Choosing a tenant or employee background check company is one of the most critical steps in the screening process. Which company you choose will have a direct impact on the quality, accuracy, and compliance of your background checks, so it pays to do your homework. Here are the must-haves you need.

FCRA Compliance

Any provider you work with must strictly follow FCRA guidelines, including procedures around consent, data usage, and adverse action notifications. Working with a non-compliant company could leave you exposed to fines or lawsuits.

Data Accuracy

Even a minor error in a background report can have major consequences. Look for companies with a strong track record of data integrity and that align with major credit reporting bureaus.

Turnaround Time

While speed shouldn’t come at the cost of accuracy, it’s important that the provider can deliver timely results. Whether you’re onboarding a new employee or reviewing tenant applications, delays in background checks can be frustrating and cause you to lose opportunities.

Customization Options

Your screening requirements may differ based on job roles or tenant profiles. Choose a provider that offers flexible packages tailored to your needs.

Security Protocols

Background checks involve handling sensitive personal data, so make cybersecurity a top priority. Investigate how the company safeguards data against breaches and unauthorized access.

Look for providers that are transparent about their data protection practices and have strong encryption and compliance certifications in place.

Customer Support

Reliable customer service is essential, especially if issues arise during the screening. A provider with responsive, knowledgeable support staff can help you resolve problems quickly and stay compliant with legal requirements.

Get Background Check Services for Small Businesses

Small businesses often operate without dedicated HR or legal teams, making reliable background checks even more vital. There are often too few resources (and time), a lack of compliance knowledge, and inconsistent hiring practices.

You can overcome these challenges by partnering with employee background check services that can customize their services to your needs. While it's possible to perform some checks yourself, professional services ensure compliance and deliver more thorough results—and they’ll make sure you’re not missing any important steps.

Regardless of the size of your business, or how many rental units you have, you cannot afford to leave things to chance. You significantly reduce your risks when conducting background checks.

Partner with Command Credit

If you're looking to streamline your tenant and employee background checks, Command Credit offers a trusted solution backed by decades of expertise. Command Credit offers comprehensive services, including:

Consumer credit checks: Ideal for both tenant and employee screenings, providing a clear view of financial reliability.
Business credit reports: Perfect for B2B vetting or when leasing to small businesses.
Background investigations: In-depth investigations that cover criminal records, identity verification, employment and education history, and more.

Whether you're a property manager, small business owner, or HR professional, Command Credit delivers fast, FCRA-compliant insights to support better decisions. Contact Command Credit for a free consultation, and get started today.