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Background and Reference Checks

    Background and reference checks are additional methods of screening a job candidate. In contrast to phone screens and interviews, these checks are intended to take a deeper look at a candidate's history that would not otherwise be known. Exercising due dilligence when hiring is important to avoid any negligent hiring.

     
    Background Checks

    Reasons to Conduct

    There are many reasons employers conduct appropriate levels of screening for prospective employees through a background investigation, a reference check or both. 

    Avoiding injury

    A major reason to conduct background and reference checks is to avoid harm or legal liability of various types to the employer or to others—for example, harm to:

    • The employer's business through financial loss or image and reputational issues.
    • Other employees by sexual harassment or workplace violence.
    • The organization's customers by, for example, sexual assault on business premises.
    • The public by negligent driving.

    Litigation defense

    Defense of legal claims—negligent hiring and retention, as examples—is a compelling reason to conduct in-depth criminal records searches of job applicants. A multilevel jurisdictional criminal records search can be strong evidence that the employer exercised due care in hiring.

    Maximize productivity

    Hire the best and reject the rest, the saying goes. Typically, past performance is a strong indicator of future performance and can reveal an individual's professionalism, productivity, job skills and interpersonal communication abilities. A reference check helps distinguish between a true high flier and a mere poser.

    Practical Challenges

    Human resource professionals face a variety of practical challenges when conducting background investigations and reference checks. With respect to background investigations, the challenges include:

    • Obtaining the individual's consent. 
    • Selecting a vendor. 
    • Having limited access to criminal records, and mistaken identity. Obtaining cooperation of third parties.
    • Obtaining enough—but not too much—information.
    • Obtaining reliable information.
    • Creating a record of the background-checking process.
    • Evaluating the information obtained in a nondiscriminatory fashion. 
    • Retaining background-checking records for the time required by law.

    The personal reference check may be one of the most insightful background screens, but it can be one of the most difficult to obtain. Whether done in-house or through an outside vendor, well-organized and executed reference-checking practices yield the most valuable information about what to expect from job candidates—that is, much more than just an applicant's "name, rank and serial number."

    Aspects of Background Investigation

    "Background investigation" is a generic term that may encompass research into one or more types of information about a job candidate. Employers should inquire about different aspects of an individual's background in different situations.

    Timing

    Conducting a background check can take 48 hours or less—or it may take as long as a week. If there is great pressure to fill a position, the better course of action is to run background checks on the two or three finalists rather than on a single candidate who has received a contingent offer. Investigating only the final candidate may seem to be most cost-effective; however, that approach runs the risk of having to rescind an offer and start from square one if the results are unsatisfactory. 

    Having a clean background check on file for a new hire may be sufficient in the short run, but many employers conduct post-hire or reoccurring background screening at regular intervals for certain job categories or employment situations.

    Eligibility for employment in the United States

    Although not a background check in the commonly understood sense, the process of verifying an individual's eligibility to work in the United States is a type of employee screening that should be addressed in this context. Employers must complete a Form I-9 for all newly hired employees to verify their identity and authorization to work in the United States. 

    The types of acceptable identity and employment authorization documents employers can accept from new hires change periodically. The current document is Form I-9

    The use of E-Verify—the U.S. government's online system for verifying employment eligibility—is voluntary for most employers, although an executive order requires all federal contractors to use the system to confirm the legal status of their employees or risk losing their government contracts. 

    Some state governments have also passed laws requiring employers to use E-Verify. Review your state laws to determine compliance.

    In development is an online Form I-9, which would help employers ensure the information gathered from new employees is accurate and input correctly. 

    Employment history

    Some people include false employment history on their resumes. Employers frequently discover lies embellishing job responsibilities. Other frequent falsehoods involve skill set, dates of employment, previous employers, and job titles and roles.

    Education history

    Listing academic degrees never obtained or educational institutions never attended are also common resume falsehoods. One high-profile case involved the admissions dean for the Massachusetts Institute of Technology, who resigned after it came to light that she had claimed three degrees she had not actually earned. Similarly, a former CEO of RadioShack resigned after executives discovered he had falsely claimed to have two degrees from a college in California.

    Criminal history

    Increased use of criminal background checks by employers to prescreen job applicants stems from the growth of claims alleging that an employer was negligent in hiring or retaining an employee who subsequently engaged in workplace violence or some other act that resulted in harm to a person (e.g., sexual assault) or property (e.g., theft). Many organizations also perform criminal background checks on current employees, either as a matter of course or prior to a promotion, transfer or other change in the terms and conditions of employment.

    Companies that use criminal background checks should examine and understand the EEOC's 2012 guidance on criminal background checks; an evaluation of current practices in light of this guidance will help HR professionals assist managers in an individualized assessment of each record. 

    Generally, it is not practical for employers to perform criminal background checks in-house. The result has been the emergence of third-party service providers whose business is to conduct background screening for employers. These providers, as a rule, are better equipped to conduct thorough and accurate background screening, assuming they adhere to certain guidelines and practices.

    Motor vehicle records

    Employers should always check the driving record of any individual who will operate an organization vehicle at any time or who will drive personal or rental vehicles on company business. A motor vehicle record typically lists license status, license class, expiration date, traffic violations, arrests and convictions for driving under the influence, and license suspensions or cancellations. See Sample Motor Vehicle Driving Record Policy.

    Specific industry mandates

    For some jobs, federal or state law requires a background investigation. For example, in 2007, the U.S. Department of Homeland Security issued an interim final rule that requires chemical plants to conduct background checks of current and future employees and contractors who have unescorted access to the facilities. New Jersey has enacted similar legislation. Another example is the background and driving record checks required by the U.S. Department of Transportation for commercial drivers. 

    Consumer credit reports

    Credit reports are frequently sought for candidates applying for positions that involve financial responsibility. Such a report helps an employer ascertain whether the applicant's financial status might pose a risk in a position involving handling money or exercising financial discretion. Credit reports should be used with discretion because many EEOC and state laws prohibit their use when an employer cannot present a compelling business rationale for such reports. Quite simply, they should be reserved for positions meriting credit scrutiny. 

    Reference Checks

    Purposes of Reference Checks

    Verify employment

    HR professionals should contact previous employers to verify:

    • Dates of employment.
    • Job title(s).
    • Duties performed.
    • Circumstances of separation.
    • Compensation.

    Determine qualifications

    Previous employers (including supervisors and co-workers) can be contacted to determine pertinent knowledge, skills and abilities of applicants, as well as character of applicants.

    Verify authenticity of reference letters

    Creating a fake reference letter is easy—company logo and all. Accordingly, generic letters of reference—especially dated ones or ones from nonemployers—have relatively little value and should be scrutinized carefully before relying on them whatsoever. One way to check their authenticity is to look up the author's telephone number in another source and to call the person directly.

    Questions to ask

    Common questions asked of references include:

    • What were the individual’s job responsibilities and salary?
    • Was the individual successful in his or her role at your organization? Why or why not?
    • What was it like to supervise the person?
    • Was the person a valuable member of the team? Why or why not?
    • What unique skills did the individual bring to your organization?
    • What were his or her strengths?
    • What were his or her weaknesses or areas that needed improvement?
    • Was the person ever disciplined, and what were the circumstances?
    • Do you think the individual is suitable for the job being applied for?
    • Why did the person leave your organization?
    • Would you rehire the person? Why or why not?

    And one question should be asked above all others, according to Steve Lowisz: “What do we need to be aware of to ensure that we create an environment that will help the candidate succeed?”

    Regulations to know

    Federal law

    A number of federal laws explicitly or implicitly apply to the practice of background investigation.

    Fair Credit Reporting Act (FCRA). The FCRA regulates the use of consumer credit reports and investigative consumer reports. Inquiries about job performance cross into the world of investigative consumer reporting. An investigative consumer report includes character references or personal opinions in addition to verifications of public record sources typically found on a basic consumer report. Proper written disclosure and candidate notifications for this type of inquiry, required under the FCRA, should be done before requesting a credit report. 

    Fair and Accurate Credit Transactions Act (FACT Act). Among other things, the FACT Act, which amends the FCRA, governs the secure disposal of consumer credit information. 

    Equal employment opportunity (EEO) laws. Employers should take care to ensure that background investigations comply with all applicable EEO laws. A particular risk is that reliance on background investigations may result in adverse impact discrimination. 

    Immigration Reform and Control Act of 1986 (IRCA). The IRCA prohibits discrimination on the basis of national origin or citizenship, except for undocumented immigrants, for employers that have four or more employees.

    State law

    Various state laws may overlap with some of the relevant federal laws; moreover, states may have additional requirements with respect to:

    • Obtaining a consumer credit report.
    • Controlling illegal immigration.
    • Using criminal history in employee selection.
    • Safeguarding information.
    • Retaining records.
    • Blacklisting.
    Additional Resources 

    https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/conductingbackgroundinvestigations.aspx

    https://www.humanresourcesmba.net/faq/what-do-human-resources-managers-need-to-know-about-conducting-employment-background-checks/

    https://www.shrm.org/resourcesandtools/tools-and-samples/policies/pages/backgroundcheck.aspx

    https://www.opm.gov/policy-data-oversight/assessment-and-selection/other-assessment-methods/referencechecking.pdf