Simple background screening best practices for small businesses.
By DeeAnn Myers
You have seen the headline: “Employee/Contractor Embezzles Over $4M from Small Business and Owner Must File for Bankruptcy and Lose Everything.” You cringe. You need to place an ad today and start hiring.
While not exact, the U.S. Department of Labor’s estimate is simple—the average cost of a bad hiring decision is at least 30 percent of the individual’s first year expected earnings. If you take an employee with an annual income of $50,000, the cost to the organization can be $15,000.
Would it not make sense to spend $100 to save $15,000 or more? Background screening can provide you that type of savings and in some cases may cost even less depending on what you want/need.
The top four reasons for conducting background checks are:
1. Protecting the safety of employees and customers
2. Improving the quality of new hires
3. Mandated by law/regulations
4. Protecting company reputation; preventing theft/embezzlement
Creating a Background Screening Policy
Most organizations conduct at least one type of background screening and more than 73 percent state that they have a documented policy for background screening procedures, according to a 2020 survey from the Professional Background
Screening Association (PBSA). We recommend creating a simple background screening policy designed by position.
Here is how to get started. List the types of positions your company will have/hire for this year. Then, list their duties as they could lead to risk. Next, list who they meet/interact with. For instance: Accountant. Theft/Embezzlement. Employees/Vendors/Customers. This will allow you to easily decipher what you need to protect and what risks you should mitigate. You can now create a simple background screening policy per position for your company. Put it in writing and find a great background screening provider. Lastly and importantly, adhere to your new policy for all hires. We also recommend conducting annual re-runs or background screening annually for all your current employees. Workplace safety is an important concern as everyone returns to work.
Conducting Searches
What searches should you run? As an employer, with permissible purpose, you have access to a ton of information regarding your new hire’s past (in most states prior to hiring). Everyone should begin with the basic National Database Search and National Sex Offender Registry. This is a database search that accesses records reported to the database in all 50 states. It does sift through more than 500 million records and searches through a multitude of government national security lists and watchlists. Unfortunately, not all states report the same information to this source, so it is never recommended as a stand-alone search.
Second, based on the state, it is recommended to conduct either a statewide or county search. For example, running a State Repository in Colorado will provide you better coverage of the entire state at a cost-efficient price. However, that would not work the same in Missouri as the State Repository does not report as precisely; therefore, you get better coverage for your money by running county specific searches. Speaking with an expert in the field is a must. An expert will be able to advise you according to where you are located. It is best practice to search in all counties the applicant has lived in for the past seven years. This is where knowing and being able to distinguish between running counties or state repositories will really aid in giving you the best search at the best cost possible.
If your new hire will be driving, you will need to check the Motor Vehicle Report for any driving infractions and for larger driving positions a DOT physical and any other testing that would be required by DOT.
If you want to protect your company from theft/embezzlement, you should consider running a Nationwide Federal Criminal Search. Federal records show criminal complaints brought by the U.S. government against defendants for violations of federal criminal law. Federal crimes will not appear in state or county felony and misdemeanor court record searches as they are prosecuted at the Federal level. Each state is comprised of Federal districts with most having two to three within each state. You can search by
district or state, or as a Nationwide Federal search.
If you are hiring someone in accounting or managing finances, you should pull a credit report and confirm they are able to handle their personal finances prior to entrusting them with yours. (This is something that has been a best practice in the banking/mortgage/investment industry for decades.)
Drug Screening is a necessity in the transportation industry. Traditionally, most companies offered a selection of a 5 or 10 panel test. Today, with the legalization of marijuana (medical and recreational based on state) you can select a 4 or 9 panel without marijuana. Ensure that you have the tools you need to tackle this important task inside your office with supplies or outside your office, hands and scheduling free.
If you are dependent on a person to have a degree, professional license or skill set, you can simply verify it prior to allowing them to represent your company. Employment, Education, License and Reference verifications are essential in knowing who you are brining onboard to work for your company.
Finding a Background Screening Company
Most reputable background screening companies are Consumer Reporting Agencies and can assist your business with Fair Credit Reporting Act (FCRA) compliance. We always recommend using a background screening provider that is a member of the PBSA, Professional Background Screeners Association. Today, there are simple, contactless and paperless options with compliance forms built right in to make your HR life easier and your workplace safer.
Theft and assault are the most common crimes. They happen a lot more than one might think. Protect your future by looking into one’s past. Align your positions, risk and exposure. Know who you are hiring and if they have a history of criminal activity. If they have committed a crime, it is highly likely they may commit another crime.
Two reports on long-term recidivism among prisoners released from state and federal prisons showed very high arrest rates. The rate for state prisoners was 83 percent over a nine-year study period, while it was 39.8 percent for nonviolent and about 64 percent for violent federal prisoners over an eight-year period.
It is heartbreaking to see a small business make the headlines and tarnished over something that could have been avoided for a small price and a few minutes. Background screening companies have a passion and a duty to secure America’s public and most vulnerable. They can guide you through the process that includes a simple background check. It really is security for peanuts. | WA
DeeAnn Myers is Vice President of Datasource Background Screening Services (Blue Springs, MO). She is an FCRA expert and offers a wide array of FCRA compliant background screening products for employment, volunteer and tenant screening. DeeAnn can be reached at (816) 228-5255 or e-mail [email protected].