Background Checks on Current Employees: What You Need to Know

Why Conduct Background Checks on Current Employees?

A truly smart business owner understands that there are valid reasons for conducting background checks on current employees even though a background check was conducted at the time of hiring.

Major changes in an employee’s life, such as a divorce, money problems, substance abuse or a stressful event, could push an employee to commit fraud or other misconduct.

When to Run Background Checks on Current Employees

While background checks are common during hiring, certain situations call for conducting them again during employment. Consider a follow-up background check if:

• An employee’s job performance has declined unexpectedly
• You observe suspicious behavior or signs of misconduct
• The employee may be putting others at risk (e.g., bullying, harassment, threats)
• You suspect criminal activity or policy violations

Rechecking an employee’s background in these cases can help you identify personal or legal issues that may affect your business or team safety.

For example, if your employees operate company vehicles or handle sensitive data, your insurance provider may require periodic background screenings to maintain coverage and reduce liability.

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And, if you have employees who drive as part of their job responsibilities, especially if they drive a company vehicle, recurrent checks may be required by your insurance company.

Do You Need Employee Consent for Ongoing Background Checks?

Employee consent is typically required for ongoing background checks—and not just once. Under the Fair Credit Reporting Act (FCRA), employers must obtain written authorization from an employee before conducting a background check using a third-party agency. While some employers include a broad, one-time consent during hiring, this may not be sufficient for periodic checks over time.

Renewed consent may be required if the original authorization does not clearly state that future or ongoing background checks will be conducted. Best practice is to include a standalone disclosure and obtain updated written permission for each new check, especially if significant time has passed since the last authorization.

State laws may impose stricter requirements than federal law. For example, some states limit how frequently checks can be performed or require fresh consent each time. Always review your state’s laws to ensure compliance and avoid liability.

In short: consent must be clear, current, and compliant with both federal and state regulations. When in doubt, reauthorize.

Be Open About Ongoing Background Checks

If you do conduct ongoing background checks on your employees, it is prudent to let them know when you hire them.

You should have a policy that clearly states how often you will be conducting background checks… every three or five years, or annually.

Include that in the documents they sign and in your employee manual.

Avoid Discrimination and Bias

Make sure that any time you use an employee's background information to make an employment decision -- regardless of how you got the information -- you must comply with federal laws that protect applicants and employees from discrimination.

This includes discrimination based on race, color, national origin, sex, religion, disability, genetic information (including family medical history), and age (40 or older).

These laws are enforced by the Equal Employment Opportunity Commission (EEOC).

Using a Third-Party Background Check Company

In addition, when you use a company that conducts background checks, you must comply with the Fair Credit Reporting Act (FCRA), that explains the Federal nondiscrimination rules and the FCRA.

It's also a good idea to review the laws of your state and municipality regarding background reports or information because some states and municipalities regulate the use of that information for employment purposes.

How to Handle Background Check Findings and Termination Decisions

1. Define What Warrants Termination

Not all background check findings warrant termination. Clearly defining which offenses may lead to dismissal helps ensure fair and legally sound decisions. For example, findings such as violent crimes, theft, embezzlement, or fraud may be grounds for termination—particularly in roles involving safety, finances, or sensitive information.

These standards should be documented in a written background check or employee conduct policy. Clear documentation ensures transparency, sets employee expectations, and provides a defensible basis for termination decisions if challenged.

2. Allow the Employee to Respond

Before taking any adverse action based on a background check, employers are legally required under the Fair Credit Reporting Act (FCRA) to provide the employee with a pre-adverse action notice. This includes a copy of the background report and a summary of their rights under the FCRA.

Employees must be given a reasonable opportunity—typically five business days—to review the findings and dispute any inaccuracies. This step is not only a legal obligation but also an important fairness measure in the process.

3. Consider Relevance and Context

Even when a background check reveals a conviction or issue, employers should consider whether the finding is relevant to the employee’s current role. Factors to weigh include:

• How long ago the offense occurred
• The nature and severity of the offense
• Whether the offense is directly related to the job duties or workplace safety
• Evidence of rehabilitation or positive work performance since the offense

This individualized assessment supports fair decision-making and reduces the risk of discriminatory practices.

4. Ensure Fair and Consistent Application

Apply background check and termination policies uniformly across all employees. Inconsistent enforcement can lead to claims of discrimination or unfair treatment.

This means using the same criteria for all positions with similar responsibilities and maintaining records of how decisions are made. Align your process with Equal Employment Opportunity Commission (EEOC) guidelines to avoid disproportionately excluding individuals based on protected characteristics. Fair and consistent application is both a legal safeguard and a best practice for building trust and integrity within your organization.

How to Do a Background Check on an Employee

If you're wondering how to do a background check on an employee or how to run a background check on an employee, follow these key steps to ensure legal compliance and reliable results:

1. Review Company Policy: Ensure your internal policy allows for periodic background checks and aligns with federal and state laws.
2. Obtain Written Consent: Provide a standalone disclosure and obtain written authorization from the employee, as required by the Fair Credit Reporting Act (FCRA).
3. Choose a Compliant Screening Provider: Use a reputable third-party background check service that complies with FCRA and state regulations.
4. Specify the Scope of the Check: Determine what types of information are relevant—e.g., criminal history, credit, driving records, or professional licenses.
5. Review and Assess Results Carefully: Consider the context, relevance, and severity of any findings before making decisions.
6. Provide Pre-Adverse Action Notice (if applicable): If the results could impact the employee’s job, provide a copy of the report and allow them to dispute inaccuracies before taking action.
7. Document the Process: Keep records of consent, findings, and decision-making steps to protect your organization from liability.

By following these steps, employers can conduct background checks on current employees responsibly while protecting both organizational and employee interests.

Frequently Asked Questions

1. Can you run a background check on a current employee?

Yes, you can run a background check on a current employee, but you must obtain their written consent—either during onboarding or before the new check. It’s also important to follow federal and state laws, which may require updated authorization each time.

2. Do I need consent to run a background check again?

Yes. Even if an employee gave consent during hiring, some states require fresh consent for any subsequent checks. Always check your state’s laws and ensure your consent form clearly covers ongoing or periodic screenings.

3. How do I run a background check on an employee?

To run a background check on an employee, follow these steps:

• Obtain written consent
• Choose a compliant background check provider
• Define the scope (criminal history, driving record, etc.)
• Provide pre-adverse action notice if needed
• Document the process and maintain compliance records

An effective background check policy should include:

• Frequency of checks (e.g., annually, every 3 years)
• What records will be reviewed
• Consent process and employee rights
• How findings will be evaluated
• Consequences or next steps for various results

Yes, but only if the findings are relevant to the job and you follow proper legal procedures. You must notify the employee, share the report, give them a chance to respond, and issue an adverse action notice if terminating based on the results.

6. Will a background check contact a current employer?

If the check includes employment verification, the background check provider may contact the current employer unless instructed otherwise. Be sure to clarify this in the scope of the check and communicate with the employee in advance.

7. What if a background check on a current employee reveals new criminal charges?

You should assess whether the charges are relevant to their role and company policy. Consult legal counsel, allow the employee to explain or dispute the findings, and apply your policy consistently to avoid discrimination claims.

8. What is a red flag on a background check?

A red flag on a background check refers to any information that may indicate a potential risk or concern for the employer. Common red flags include:

• Criminal convictions related to theft, violence, or fraud
• Falsified employment or education history
• Poor credit history (for financial roles)
• Suspended or revoked licenses (especially for driving or professional certifications)
• Gaps in employment without explanation
• Failed drug tests (if applicable to the role)

Not all red flags lead to disqualification—context matters. Employers should evaluate the severity, recency, and relevance of the findings to the job.