By Michael Klazema
Small businesses—whether they are entrepreneurial ventures just getting off the ground or simply modest, small-town companies—tend to be less formal with their employment processes than larger firms. This lack of formality, though, can be a double-edged sword. On one hand, small businesses may have less stressful hiring processes—both for the employers and the applicants. On the other hand, not having a formal process for hiring employees can get messy if you don’t take care to comply with all laws and regulations. With that thought in mind, here are six common mistakes that small businesses make when it comes to running background checks on job applicants or employees—as well as tips on how to avoid these pitfalls.
• Not designing a company policy on background checks. The biggest mistake that small businesses make with background checks is the error from which almost every other issue on this list springs. When you sat down to sketch out your business plan, you probably developed the company structure, chose a mission statement, and theorized potential pathways for growth—among other factors. What you might not have thought about, though, was your company’s process for hiring new employees. There is a reason for this oversight. Particularly for entrepreneurial startups, the early stages of a business are so chaotic and DIY that it’s difficult to envision ever bringing new people into the fold.
However, if your business gets off the ground, you are going to need to hire a few new people to keep it growing. To do that, you need to have a set policy for how you are going to go about screening new applicants. Most importantly, you need a well-thought-out policy for background checks that will be applied consistently across your business. When in the pre-employment process are you going to run background checks? What sort of background checks are you going to run? Which background check company are you going to use? What types of background findings might disqualify an applicant from hiring consideration? These are all vital factors that you need to address now so that they are in place and ready to be implemented the first time you go to hire someone.
• Assuming one source of criminal history checks will be sufficient. Background check databases are not encyclopedias. They are not all encompassing and do not contain information about every single person on the planet, regardless of geographical location. On the contrary, background check databases are very dependent on geography. Most criminal convictions are filed at county courts. State police databases or repositories will have information from multiple counties, but aren’t comprehensive because not all counties report consistently or at all. Multijurisdictional criminal checks can include information from multiple states, but are again not comprehensive.
Many small businesses make the mistake of assuming that a criminal background check is a criminal background check and don’t realize how geography fits into the equation. As a result, it’s not uncommon for companies to do just a county check or just a state check and call it good. For the most thorough and reliable criminal history search, you are going to want to check the records in your local county. Then, you can broaden the reach by going for a state check, or check an applicant’s address history and order county-specific checks from the areas they’ve lived. There is no one-size-fits-all approach here, but by mixing and matching criminal history databases, you should be able to cover at least most of your bases.
• Not familiarizing themselves with the FCRA and EEOC regulations (or other employment laws). You can’t just do whatever you want with pre-employment background checks. The FCRA (Fair Credit Reporting Act) has a number of guidelines that every employer needs to follow when screening personnel. The EEOC (Equal Employment Opportunity Commission) also has rules and guidelines. In addition, your city, county, or state might have their own regulations, like a ban-the-box law or ordinance that bars you from asking questions about criminal history on your job applications. Before designing your background check policy, review all pertinent employment laws so you can avoid running afoul of them.
• Failing to go beyond criminal history with background checks. Don’t just check criminal history; also check the resume. Unfortunately, many job seekers aren’t above lying (or at very least stretching the truth) to get hired. As such, it’s part of your due diligence to check into an applicant’s work history, educational history, professional licenses and credentials, and other resume information to make sure they are who they say they are. These checks will help you avoid hiring someone who is a great applicant on paper, but isn’t actually qualified for the job at hand.
• Running background checks on every applicant. You should run background checks on every person you hire or seriously consider for employment. However, you should not run background checks on every person who turns in an application. Doing so will cost your business a fortune and make it look like you are unwilling to consider any applicants with a criminal history. Instead, use resume reviews and interviews to trim down your applicant pool to two or three finalists. Then you can run background checks to help you make a decision. Alternatively, you can run a background check on just the person you decide to hire, as a conditional part of their employment offer.
• Using social media for background check purposes. It seems like a great idea: seeing how applicants behave on social media to get a better sense for who they are in real life. But social media background checks are a slippery slope that can reveal too much information about applicants—including characteristics like sexual orientation, race, gender identification, and other factors that can hamper your objectivity as an employer. To avoid bias or discrimination, just skip the social media checks.
No background check policy is entirely foolproof, and even the most established companies can make mistakes from time to time. However, by avoiding the common pitfalls discussed above, your small business should be able to develop a system that catches applicant red flags in an effective, objective, and legal fashion. As a result, you will make better hiring decisions, avoid unnecessary turnover, and save plenty of time, headaches, and money.
Michael Klazema has been developing products for pre-employment screening and improving online customer experiences in the background screening industry since 2009. He is the lead author and editor for backgroundchecks.com. He lives in Dallas, TX, with his family and enjoys the rich culinary histories of various old and new world countries.