8 Crucial Steps for Conducting a Strong Background Investigation

8 Crucial Steps for Conducting a Strong Background Investigation

Background checks reduce the risk of hiring someone with an undisclosed history of violent crime, substance abuse, or other issues, keeping your workplace safer.

Some companies skip background investigations because they can be costly and time-consuming. Not to mention, you could reject a candidate but then face a lawsuit for unlawfully obtaining the information used in the decision.

Despite all of this, the benefits of a background investigation outweigh the time and effort put into one. A well-conducted background investigation reduces the odds of hiring someone who is dishonest, immoral, or dangerous.

For instance, a South Carolina woman was recently arrested for allegedly practicing medicine as a nurse at multiple nursing homes without a license. This potentially put patients in danger and risk of inadequate medical care. To get the jobs, she used someone else’s license number, which could’ve been caught had a thorough background investigation been completed.

So, how do you conduct a background investigation? Why is it important? This article highlights eight areas to never miss while conducting a background investigation, plus the many benefits of investigating applicants pre-hire.

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Why Conduct a Background Investigation?

Workplace violence, employee theft, and legal obligations have made background investigations a common practice.

Here are three reasons why an employer should conduct a background investigation for every single employee they plan to hire.

It’s Easier to Not Hire than to Fire

First, conducting a thorough screening reduces the odds that there will be an unfortunate surprise after the applicant is hired.

If a background investigation reveals that one of the applicants has a criminal record of physical violence, the company can hire someone else. But, if no check was done and this new hire is showing warning signs, it may be difficult to terminate their employment legally.

A Bad Pick Can Cost a Lot

Second, a poor hire can cost a lot of money and time, while also causing significant reputation damage to your organization. Replacing the problematic employee that you just hired means spending time, money, and effort all over again.

In addition to up to 50 per cent of the person’s yearly salary (or more for an executive or specialized employee) to replace them you could suffer team disruption, lost work time during training, and the dip in morale that turnover often causes.

Use your resources wisely and hire the right person from the start.

It Helps Companies Be Compliant

Lastly, employers have a legal duty to maintain a safe place for employees and customers, and background investigations help them do this. Background checks reduce the risk of hiring someone with a history of violent crime, fraud/theft, or substance abuse, therefore keeping the workplace safe.

A background investigation is one task where it’s better to spend money and know the job has been done right than to try to do it yourself. The laws surrounding background investigations are complex, and getting the necessary information requires expertise, so it’s generally advised to hire a specialized third party to take on this task.

While thousands of these businesses have sprung up, offering anything from a routine record check to an in-depth investigation for a relatively low cost, it’s important to hire a reputable company or investigator.

Another perk of hiring a third-party for the job is that they are covered by the Fair Credit Reporting Act (FCRA). This federal law regulates the collection and retrieval of consumer credit reports, shaping what employers can and cannot access.

Whether the background investigation is conducted by an in-house investigator or a third-party company, take the steps below to ensure it’s thorough and doesn’t miss any red flags.

Verify Their Employment

When candidates want to improve their chances at winning the position, they might pad their resume with fake or exaggerated employment history.

In one story from Top Resume, a candidate lied about being employed at a company where the recruiter was employed at the time. The recruiter asked the candidate about his duties and coworkers, and it turned out he was using a family member’s stories to beef up his resume.

Coincidences like these are rare. Most of the time, a lying candidate won’t be caught until the background investigator verifies their previous employment experience.

It’s important to verify a candidate’s previous job positions, dates of employment, wages, and rehire eligibility. For many industries, such as healthcare, on-the-job experience is more important than a degree, and to lie about experience can be potentially fatal.

Verify Their Education

According to one study, 78 per cent of candidates misrepresent their experience or education on job applications. New technology and online businesses make it easy to create a fake diploma or other certification.

The background investigator should get in touch with the candidate’s school(s) to confirm that they attended the institution, completed the program, and obtained the degree listed on their resume. If they claim other achievements, such as graduating with distinction, the investigator should ask about those as well.

A candidate claiming to have degrees they never earned might seem minor, but it can cause true harm to a business.

For example, imagine learning your family doctor never attended medical school. Or, consider George Santos, Congressman-elect for New York, who lied about attending both a prestigious NYC prep school (he did not) and a college in the city (he has no higher education degree), among other lies about his experience and background.

Confirm Other Job-Related Qualifications

For some industries, there are other job-related qualifications that the applicant must possess beyond education and experience. Many trades and the healthcare industry require professionals to hold licenses or certificates.

For example, if you are the hiring manager for a busy emergency pet hospital, the investigator should check that the candidate is in good standing with the American Veterinary Medical Association. Having this certification shows that the candidate is registered, fit to practice, and does not have any open investigations against them.

Also, by verifying the candidate’s job-related qualifications, your company is protecting itself against a negligent hiring lawsuit.

According to Greenhouse, negligent hiring is a legal term describing “an employer’s liability for an incident caused by an employee when the employer knew (or should’ve known) that the employee posed a risk.” If the new hire causes harm to a customer, patient, or employee, but there were red flags you should’ve seen, your company may be on the hook for any physical or mental harm caused.

For example, the US Department of Veteran Affairs (VA) failed to properly vet doctors for their community care program. Doctors that shouldn’t have been approved by the VA had an expired medical license, a conviction of patient abuse, a record of healthcare fraud, and other unsavory pasts. This put the veterans in danger and could’ve been avoided with proper background investigations.

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Follow Up with References

The background investigator is not usually responsible for following up with the applicant’s references. The recruiter, hiring manager, or another HR professional usually takes on this task. Regardless, the goal is to communicate with references who can either confirm or deny what the applicant is claiming to be true.

There are many instances where speaking with a reference, whether it’s a recent supervisor, a university registrar, or acquaintance, exposes critical information. The reference may be able to lay out a timeline or explain gaps. Perhaps the reference will expose that the candidate’s departure from their last job was not voluntary.

Speaking with references is also a great opportunity to ask open-ended questions. Move past yes or no questions and ask about the applicant’s work ethic, loyalty, and morals.

Donna Svei, founder of executive resume writing service Avid Careerist, recommends asking: “On a scale of 1 to 10, with 1 being ‘problematic’ and 10 being ‘no concerns’, how would you rate the candidate’s ethics?”. If the response is anything other than 10, Svei says, ask for further explanation. How they answer this will reveal a lot.

Conduct a Criminal Record Check

Conducting a criminal record check is one of the most common steps in a background investigation. One survey found that 60 per cent of employers require criminal record checks for all potential employees.

It’s important to know if a potential hire has ever been convicted or pleaded no contest to a crime. If they were convicted of a crime, you can also learn other important information such as:

  • What was the nature of the crime?
  • Was it a misdemeanor or a felony?
  • When did the crime occur?
  • Was this a first offense or one of many?

While there is a lot of valuable information here, the use of criminal record checks may negatively impact diversity applications. Fortunately, the Equal Employment Opportunity Commission developed a guidance document titled “Consideration of Arrest and Conviction Records in Employment Decisions.” Section VIII, Employer Best Practices, is particularly insightful for employers who are considering criminal record information when making employment decisions.

Employers should also check with their state and local laws concerning the legality of criminal record checks.

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Conduct a Credit Check

While a criminal record check can reveal whether an applicant has been in trouble with the law, a consumer report can show some undesirable traits.

The record tracks debts they’ve incurred, including mortgages and student loans, and the payment history of those debts. A person’s financial history can give insight into whether they are responsible and organized or a risk.

For example, imagine the hiring manager of an accounting firm requests a credit check for a potential new hire. They notice that the individual has significant debt and has been struggling financially for decades. This person should not be teaching others how to be savvy with money.

The FCRA strictly regulates the use of credit checks in hiring. There are three main rules you should know as an employer:

  1. It’s illegal to conduct a credit check without notifying the candidate and receiving explicit, written consent.
  2. You must notify the candidate if the report is the reason they were not hired.
  3. The candidate has a right to explain red flags or request that incorrect information be fixed.

Conduct a Motor Vehicle Record Check

A motor vehicle record (MVR), like the consumer report, can reveal certain traits of the applicant. An MVR uses the person’s driving history to show whether they engage in risky behavior such as excessive speed, or illegal acts such as driving under the influence of alcohol or drugs.

MVRs are crucial for jobs where the individual will be driving, such as a subway operator, a delivery person, or a taxi driver. If the individual will drive for any part of the job (such as a caterer or real estate agent), however, it’s best to look at their driving record. The company may face a negligent hiring lawsuit should they be involved in an accident that causes harm.

Additional Questions for Special Background Investigations

Depending on the job or the company, you might need to take additional steps in the background investigation process.

Federal government agencies that handle confidential information often require secret and top-secret clearances. To help the applicant obtain a security clearance, the investigator may also need to:

  • Interview neighbors, friends, and/or close associates
  • Inquire about substance use (both legal and illegal)
  • Analyze mental health and treatment (if applicable)
  • Question international travel and relationships with foreign nationals
  • Investigate residential history
  • And more

Just like no interview is the same, no background investigation is the same. Follow these eight steps and tailor them to your unique situation to conduct a thorough, informative and revealing investigation every time.

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If you’re still simply reacting to employee misconduct, you’re putting your organization, your other employees, and your reputation at risk.

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Learn more about how Case IQ can improve your organization’s investigations here.