Why Corporations Hire Third-Party Background Check Companies

The scales of justiceA corporation’s motive for conducting employment background checks is obvious: By investigating applicants’ history, companies can avoid hiring insalubrious, untrustworthy characters. This focus on employee investigation isn’t just paranoia; in a recent whitepaper, ADP reported that 6 percent of the employment background checks they conducted for other companies in 2010 revealed a criminal record. Beyond the enormous impact a bad hire can have on operations and profits, failing to research new hires can be termed negligence in court.

Clearly, there are many good reasons for carrying out employment background checks. What is less evident is why more and more corporations are outsourcing employee background screening to third parties. Below, we explain why many modern corporations depend on professional employee background check companies.

Increased Efficiency and Return on Investment

The laws surrounding employee background screening are complex. To avoid costly lawsuits, corporations must ensure that their employment background checks are carried out in a legal, respectful manner. Figuring out just how to do that would probably be enough work for one full-time employee. Actually gathering the resources needed to thoroughly investigate applicants might take a second HR worker months! In the end, most companies simply don’t have the internal resources to develop and implement a legally kosher, comprehensive process for conducting employment background checks.

Outsourcing employment background checks is a good way for companies to limit costs and boost overall efficiency. Instead of researching the labyrinth of employment screening laws, employees can focus on the issues that lie at the heart of the business.

Enhanced Experience and Better Access to Pertinent Records

Besides reduced costs, achieving improved results is the second most frequently cited reason for all outsourcing. Employee background screening is no exception. Professional providers of employment background checks are specialists in their field; they have more experience and better tools for carrying out legal, effective investigations.

Legal Protection

Paying exorbitant legal fees and court-awarded damages is often more than enough to send a business into failure. Many corporations choose to trust their employment background screening to third parties because doing so brings them more legal immunity than they would have if they conducted background checks in-house. FCRA (Fair Credit Reporting Act) legislation establishes legal immunity for companies that outsource background checks. This protection covers defamation, privacy invasion and hiring negligence lawsuits.

However, it’s important to note that companies must still notify applicants if they or a third party are investigating candidates’ “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living,” according to FCRA legislation. To protect their clients, many employee background screening companies provide FCRA-friendly authorization and disclosure forms.

Sense of Privacy for Applicants

If a company conducts employment background screening in-house, employees may suspect that some of their co-workers pried into their background, eroding trust. Partnering with a third-party provider of employment background checks also sends the message that you are providing even-handed treatment to all applicants.

Adverse Action Letters often Included

If you decide to reject an applicant based on certain characteristics, such as poor credit history, the law dictates that you must inform the individual of your decision. Third-party employment background screening firms often include adverse action letters in their services, saving you time.

Fewer Hiring and Legal Mistakes

Few HR managers are aware that certain states require that applicants be provided with a copy of their background check, even if not requested. Another thing about employment background screening laypeople may not know is that information on arrests that did not result in convictions cannot be used in pre-employment screening. Sealed and special disposition cases are also off-limits.

The byzantine nature of the laws surrounding employment background checks makes it difficult for anyone except experts to get this process right. Hiring a third-party employment background screening company generally results in fewer hiring and legal errors.

As we have seen, outsourcing employment background screening results in lowered costs, improved outcomes and improved legal protection. If reading this article has convinced you that background check outsourcing is the right choice for your company, be sure to select a vendor that offers social security number traces as well as a search of county, state and federal felony and misdemeanor information. This is the industry standard for conducting employment background checks.

[ Photo by: James Cridland, on Flickr, via CC License ]

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