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Small business and pre-employment screening

Employment verification has become a crucial issue for small businesses owners today.Regardless of the size of your business, pre-employment screening is a necessary hiring practice that you must use to avoid lawsuits and costly hiring mistakes. Gone are the days that you can use a simple reference check and a few phone calls to screen new employees. Amid security concerns, corporate scandals, and workplace violence, pre-employment screening has been gaining in importance.

Pre-employment screening is the process of using psychometric testing, background checks and drug testing in order to determine the background and identity of hiring a new employee. Background checking is the most popular method of pre-employment screening. Over 96% of Human Resource professionals report that their companies do background checks of new hires.

There are certain precautions you should take before you delve right into a thorough background check of your potential new hire and you should consider the potential legal landmines that can impact your small business. Investigating the background of a potential hire can help minimize the risk against negligent-hiring lawsuits. It is important to understand that you and your company can be held liable for the actions of a new employee especially if you did not perform a background check. But you should be aware that prior to beginning a background check, it's important your small business complies with the Fair Credit Reporting Act and the American with Disabilities Act.

Under The Fair Credit Reporting Act( FCRA), your small business is required to have employees sign a disclosure form that grants authorization to perform a background check. The FCRA is not just restricted to credit reports but includes all "consumer reports." The laws will vary from state to state in how and what information can be used during the pre-employment screening process. For example, your state laws may prohibit using certain aspects of a criminal record during apre-employment background check. You should also consult with local regulators and legal counsel before going too deep into the criminal past of a new hire.

The Equal Employment Opportunity Commission (EEOC) defines a disability as a person who is classified under The American with Disabilities Act (ADA).This means that a person:

  • has a physical or mental impairment that substantially limits one or more major life activities

  • has a record of such an impairment

  • or is regarded as having such an impairment.

Under ADA, employers are restricted in using any medical or disability data in the hiring process. The bottom line is: you cannot ask during the interview or background check about a person's disabilities. The ADA covers businesses that have 15 or more employees, including state and local governments.

Small business owners should understand that what is included in a background check can vary. Background checks can access a full range of data including but not limited to:

  • credit records

  • academic records

  • social security number

  • personal references

  • driving records

  • criminal records

  • workers' compensation

Many small business owners feel that they simply do not have the resources to adequately do pre-employment screening. One solution for this is to employ the services of a background checking company. Hiring an outsider can be helpful in finding accurate, complete information on job candidates. Your outsourcing partner should also be able to steer you through the legal requirements as well as federal and State regulations of background screening. Another added bonus is under FCRA, your small business will have limited legal immunity by using a third-party background pre-employment screening company.

Whether your small business decides to outsource or conduct pre-employment screening practices on their own, it is crucial to take the necessary time to educate yourself on the process. Many small business agencies such as the Small Business Administration (SBA) can provide counsel. In addition you may want to visit your state government's websites on FCRA and ADA. Background screening shouldbe a standard practice of operating a successful small business.

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