Why Both an Employee Credit and Background Check Matter

Why Both an Employee Credit and Background Check Matter

safe-work-environmentOften, as an employer, a thorough background check is key to finding the right person for the job. And if you can do both, you should. But why do they matter, and how should you use them?

When You Can Check

First of all, you should be aware of what you can check and when. Currently, eleven states have laws restricting employee credit checks, and if you do run credit checks, you’ll need to abide by the Fair Credit Reporting Act, or FCRA. You’ll also be required for all background checks to inform your applicant, get their consent, inform the applicant of the scope of the investigation and verify to the background check company you’ve done this, according to federal law.

In other words, you need to know the laws and your obligations before engaging in a background check. But while it seems like a lot of work, it matters for a few reasons.

Why You Should Check

The most common reason to check the background of potential hires is liability. If an employee commits an unethical act or an outright crime while working for you, you may be in legal trouble if it can be proved you were aware of any sort of issue, or even if you simply hired a person without bothering to check, depending on the situation and the crime committed. But there are reasons well beyond legal liability.

In most cases, background checks are most important for employees in sensitive roles, such as jobs where they handle money or dangerous materials. It also allows you to follow your hunches. Take, for example, reference checks. If during the interview something sounds odd about your applicant’s work history, you can check it against their background and see if there’s a problem you need to know about.

Credit checks, on the other hand, let you spot potential issues with applicants before they start. This doesn’t mean you should get back a clean credit check before hiring, necessarily. But if you see a concerning pattern in their credit history, like frequent changes in home address, you can incorporate that into your decision.



Don’t Stop With The Check

In some cases, you can rule out an employee right away, but don’t fall into the “check trap.” This is best illustrated by the federal government’s guidelines on credit and background checks; they note that some populations are more likely to deal with legal issues, and thus you can stumble into a pattern of discrimination if all you do is look at the background check.

Sometimes the most useful thing you get out of the background or credit check isn’t the results, but the employee’s reaction. Somebody who lets you know there might be an issue on their check before you run it often shows the kind of character you want on your team. And sometimes, what’s on the check turns out not to matter; employers often need to weigh the importance of a brief moment of stupidity back in high school against the adult applying to work for them.

Running the right checks is crucial to the process. But don’t just run the check; think about what it tells you. That’s the best way to make a background check matter.

Not sure where to start with background and credit checks? Contact us and we’ll guide you to building a check strategy that’s right for you and fair to your employees.