An Easy Guide to Background Checks for Small Businesses 2018 Version 29 Nov 2018


Small businesses take a lot of hard work and finances to build. In fact, 59% of small business owners used their own personal savings or retirement fund to start their business. Since you’ve put so much work and money into your business, why jeopardize it by making a bad new hire?

A bad hire can seriously impact your business’ bottom line. A CareerBuilder survey found that the wrong hire costs small businesses $11,000 on average. Many small businesses don’t have the financial resources needed to deal with a bad hire. So, how can small businesses make the right hire?

By running background checks. Running a background check ensures that a potential new hire has the skills and experience needed to succeed at their job. It also makes sure that a job applicant is a safe addition to your workplace. Since background checks are a great way to find the right new hire, you’ll want to use them in your hiring process. How can you use background checks to help your small business?

In this article, we’ll learn why small businesses need background checks, which background checks are the most important, and how small businesses can run background checks.

Why Small Businesses Need Background Checks

Background checks are an essential way to keep your workplace safe. A criminal background check shows you if a job applicant has a history of violence or crimes that they may repeat at your office. This stops you from hiring someone who might hurt you, your existing employees, and your clients.

Background checks also protect you from negligent hiring lawsuits. It serves as a legal basis to show you put reasonable effort into checking if your new hire was safe around clients and employees.

Finally, background checks ensure you get the help you need to grow your business. It shows if job candidates have the skills, education, and experience required to do the job well and help your business thrive.

But which background checks are the most important for small businesses to run?

Background Checks That Small Businesses Need

Green checks and red x's in check boxes

Because small businesses differ in what jobs they have open, your company may require additional background checks. But in general, here are the most important background checks that small businesses need to run and a short explanation of how they help small businesses.

  • Identity verification check. Identity checks help small businesses by confirming the job applicant is who they say they are. It also ensures that all later background checks look into the right person.
  • Criminal records search. Criminal background checks show if the job candidate has a history of violence or theft they might repeat at your workplace.
  • Education verification check. This check affirms that the job applicant has a postsecondary degree in the field of study needed for their job.
  • Employment verification check. Employment verification confirms if the potential new hire has had the work experience listed on their resume.
  • Professional license verification. License verification is vital if the job you’re hiring for requires a professional license, such as a Realtor. It also shows if the person has any restrictions on their license that could affect their job performance.
  • Motor vehicle check. This check is crucial if the job requires driving or if the new hire will use a company car. This check ensures there are no restrictions on their driver’s license and that they have no DWIs.

But how can small businesses legally run background checks on potential new hires?

How Small Businesses Can Run a Background Check Legally

Multiple federal laws regulate how you can run background checks. In other words, you have to follow specific guidelines when running background checks on potential new hires. Here are some of the most important guidelines for running background checks legally.

  • Notify the job applicant that you will be running background checks. Explain to the job candidate which background checks you’ll be using and that the information gathered could affect whether they’ll get hired.
  • Get the candidate’s consent for the background checks with a separate consent form. Do not put any information in this document that is unrelated to the background checks.
  • Give the applicant a copy of the findings. Include all the information the background check found.
  • Allow them to dispute the information. There may have been extenuating circumstances involved, or the job applicant may want to explain their side of the story.
  • If you decide not to hire based on the background check findings, tell the job applicant. You should explain that the decision not to hire them was not made by the company running the background check. You also need to give them the contact information of the background check company that did the report and a copy of their rights under FCRA.
  • Use a reliable background check company. A good background check company gives you accurate results. It also understands how to comply with laws regulating background checks. A reliable company can also help you decide which background checks fit your hiring needs.

At Trusted Employees, we offer customizable background check packages that can be tailored to your business needs. We can help you decide what background checks you need for your hiring process. Contact us today to learn more about our background check packages.