When you are running a small business with limited resources, you may consider foregoing background checks to cut employment costs. However, personal and professional references often don’t provide enough information about a person. Even simple background checks can make candidate selection decisions faster and easier. This is especially important for a small business that might lack the resources to address problems that can arise from poor hiring decisions.
Criminal Background Checks
Running a basic criminal background check on applicants before officially hiring them can keep a small business from becoming a victim of fraud. While many issues that might come up through a criminal background check may not be relevant to the individual’s ability to perform their job, crimes related to fraud or theft should be considered during a hiring decision. While large corporations can handle some losses, one wrong employment decision can drive a small business to close. For this reason, money spent on criminal background checks is an essential insurance policy for the overall security of your business.
Credit Reports
A credit report is another background check that can offer employers valuable information about applicants. However, small employers can afford to be more discriminating with which positions require credit checks. Applicants for jobs that require a high level of financial accountability or that will have access to business finances should be screened using a credit report. Be aware that the states of California, Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington have state laws prohibiting employers from using employee credit reports in hiring decisions.
Legal Considerations
For all types of background reports, employers must be careful to follow specific legal requirements. You may not run a criminal or credit check on an individual without their written consent. Most employees will ask applicants to sign a background check consent form at a later stage in the hiring process. After viewing a background check, you must send the employee a pre-adverse action disclosure, a copy of the report, and an explanation of their rights to dispute reports if you think you may not hire them based on the report. When you make the final decision to not hire them based on information in the report, you must send applicants an adverse action notice to let them know.
Vetting
Transparency in hiring, on the part of the employer and the employee, is essential to building trust. This transparency can be achieved through proper vetting processes. Vetting assures that potential employees are who they claim to be and have done what they claim to have done so that you can choose the best talent for your business with confidence. In order to establish trust with potential employees, your business can join the Clear Business Directory by completing an annual vetting process which shows your community and potential hires that your operations are reputable and trustworthy.
Small business owners should always run a criminal background check on potential applicants; doing so can save a lot of money in the long run.
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