Hiring the right person can make or break a small business.
A single bad hire can lead to financial loss, reputational harm, or even legal trouble. The small cost of running an online employee background check can save you from making a bad decision or putting your business at risk.
For small businesses, employee background checks have become a key step in the hiring process for good reasons. According to the HR Research Institute, the top reasons companies conduct background screenings include:
- Improving the quality of hires
- Protecting their employees and customers
- Protecting their company reputation
- Complying with legal/regulatory requirements
Why Background Checks Are Critical for Small Businesses
For large corporations, a poor hiring decision might be absorbed. For small businesses, it can be devastating. A comprehensive small business employee background check helps verify the truth behind a resume and can reveal warning signs before they become liabilities.
Fact: As many as 70% of workers self-reported that they had lied on their resumes. More than a third said they do so regularly.
How Do I Run an Online Employee Background Check?
Let’s break down the steps, starting with what you’re legally allowed to check.
Step 1: Know What You Can Check
It’s crucial to understand what types of information you’re legally permitted to review:
- Employment and education history: Verify past jobs and academic claims
- Credit reports: Permissible only when relevant to the job
- Identity verification: Confirm the person is who they say they are
- Criminal records: Check with your state to make sure you can check criminal history
You’ll also need to comply with federal and state regulations:
- Fair Credit Reporting Act (FCRA): Requires written consent and specific disclosures
- Ban-the-Box laws: Some states restrict when you can ask about criminal history
- EEOC guidelines: Ensure checks don’t disproportionately exclude certain groups
Before conducting your first background check, you should consult an employment attorney to review your paperwork and practices.
Step 2: Choose a Trusted Background Screening Partner
There are several providers that offer online employee background check services, but you need to make sure you choose the right one for your business. Look for a provider, like Command Credit, that is:
- FCRA-compliant
- Transparent in pricing and methodology
- Experienced in handling sensitive business data
- Responsive and accessible
Step 3: Get Written Consent from Applicants
You can’t run a background check without the applicant’s permission. Legally, you must provide:
- A clear, standalone disclosure that a background check is being conducted
- A signed authorization form from the applicant
These documents must be kept separate from the job application.
Step 4: Run the Check Through Your Selected Provider
Once you have consent, submit the applicant’s information securely to your background screening provider. Depending on the scope of your check, you might receive:
- National and county-level criminal records
- Verification of employment, education, and licenses
- Credit history (if applicable)
- Social Security number trace
Step 5: Evaluate the Results Carefully
When the results come in, you need to evaluate them fairly. If there are items that give you pause, take a moment. Although you can use the information you learned with an online employee background check in hiring, you can’t use it to discriminate against protected classes. You’ll want to think about:
- Is the flagged information directly relevant to the position?
- Has the applicant disclosed this info already?
- Are there inconsistencies that need clarification?
You want to have answers in case there’s a dispute. It’s a good idea to document your decisions and consult with a labor lawyer if you have concerns.
Step 6: Follow the Adverse Action Process
If you decide not to hire someone based on their background check, the law requires a formal adverse action process:
- Pre-adverse action notice: Share the report and a summary of rights with the candidate
- Waiting period: Allow time for the individual to dispute or clarify the information
- Required information: Name, address, and phone number of the consumer reporting company that supplied the report, along with other information.
This process protects both the applicant’s rights and your business from liability.
Step 7: Store Background Check Records Securely
Even after the hiring decision is made, you must:
- Limit access to background reports
- Store records in a secure, encrypted digital system
- Follow state and federal retention and disposal guidelines
Get Online Employee Background Checks
Conducting a thorough small business employee background check is a smart way to reduce risk and make good hiring decisions. By following this step-by-step guide, you can confidently vet candidates while staying compliant.
Ready to streamline your hiring process? Contact us today to learn how Command Credit delivers secure, compliant background checks tailored to small business needs.