Updated: Sep 12, 2022
When hiring new employees for your business, is your employment screening and background check process the best it can be?
Background checks can't tell you who to hire, but they can potentially tell you who NOT to hire. They are a critical tool for helping employers avoid liability for negligent hiring—but navigating the myriad of federal, state, and local laws that govern such investigations can be challenging.
Why do employers typically get sued for negligent hiring? Because they knew or should have known about an employee's potential to cause harm. If you don't do background checks at all or don't do them correctly, you're likely to become the defendant in a lawsuit having to explain your hiring process.
Here are six tips that employers should keep in mind during the screening process:
1. Check for potential issues from the start.
Be sure to use an effective and compliant Employment Application as part of your hiring process. Ensure that the job applicant signs the application and release, identifies past employers and supervisors, and explains why they left past jobs or has employment gaps.
2. Use an accredited background screening company.
Not all background screening firms are created equally. The National Association of Professional Background Screeners—created the Background Screening Agency Accreditation Program (BSAAP). This agency has become a widely recognized seal of approval bringing national recognition to an employment background screening-affiliated organization for its commitment to achieving excellence through high professional standards with accountability resulting in continued institutional improvement.
Employers should ensure that the background check provider is accredited. The provider should allow a customized background check that is thorough enough to ensure the key areas that fit your business needs are covered effectively.
3. Simplify the screening process.
Make sure your screening process is streamlined. The process is generally initiated in one of the following ways:
The employer sends a text or e-mail through the screening firm, which directs applicants to a website where they can fill out the necessary information.
An applicant tracking system (ATS) is used to automate the recruitment and hiring process and provide hiring managers with tools to manage the process.
4. Beware of FCRA class-action lawsuits.
The federal Fair Credit Reporting Act (FCRA) regulates employment screening and outlines consent, disclosure and notice requirements for employers that use third parties to conduct background checks on job applicants and employees.
FCRA compliance involves a number of steps, and many states have their own additional requirements. Class-action lawsuits involve penalties for basic FCRA violations, such as failing to use FCRA forms or providing applicants with proper notice before making an adverse decision based on the results of the investigation.
Under FCRA, claimants in a class-action lawsuit can ask for damages of $1,000 per person. Additionally, claimants commonly ask for attorney's fees, court costs, and punitive damages, which are meant to punish the employer and deter future wrongdoing.
Employers must ensure all their forms have been reviewed by human resources and legal counsel, because it's ultimately the employer's—not the screening firm's—duty to use compliant forms and processes in screening potential and even current employees.
5. Review requirements of "ban-the-box" laws.
A number of states, counties and municipalities have some form of "ban-the-box" laws that prohibit employers from asking about criminal history on job applications.
Employers in these jurisdictions must wait until a later point in the hiring process to ask.
These laws are meant to combat the stigma attached to incarceration.
6. Understand limits on credit and salary history inquiries.
One thing that employers must remember is to not use credit reports across the board in hiring decisions. Some states prohibit the use of credit reports for hiring decisions, and others have very specific rules on how employers can obtain and use such reports. Employers should be able to show the business necessity and job relevancy of credit history information.
Additionally, employers should be aware of state and local laws that ban or limit questions about salary history. Determining a new hire's pay based on prior compensation may perpetuate disparities. Navigating the hiring process and employment screening must be compliant with both local, state, and federal laws.
Hiring an HR Consultant for your business can help you avoid unnecessary steps and exposures in your hiring and screening process. Contact us today at NexTier about our HR Consulting solutions – we can help!