3 Gaps in Small Business Background Checking

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While the adoption of employment background checks by small business is increasing, many employers may still be exposed to risk with an inadequate background checking program. According to the HireRight Small Business Spotlight, 95 percent of survey respondents are currently requiring a background check or planning to start performing background checks.

Many small businesses recognize the need and value of background checking, but may not be achieving their goals of a safe workplace, quality hires and hiring compliance based on their current screening program.

Additionally, frequent changes in state and federal legislation regarding medical marijuana use, workers’ employment eligibility and fair credit reporting are further driving the need for more comprehensive employment screening solutions, even for small business.

Without an effective background checking policy and solution in place, employers may make negligent hiring decisions or unknowingly violate regulations and incur costly fines.

Benefits of employee background checks

Source: 2011 HireRight Small Business Spotlight

Benefits of an Effective Background Checking Program
A small business with an effective employment background checking program may benefit by acquiring higher quality employees, ensuring a safer work environment and reducing potential compliance and legal risks.

When small business employers were asked why they conducted background checks, the top four responses included improving the quality of hire, complying with regulations, protecting against negligent hiring risks and protecting the employer’s reputation.

To help meet these hiring goals, small businesses use four primary types of employment background checks. Eighty-eight percent use criminal background checks, 59 percent use identity checks, 47 percent search motor vehicle records and another 46 percent verify employment history.

While these four essential background checks may help ensure a safe workplace and reduce legal risk, there are several gaps that small businesses are exposed to by relying on an incomplete background checking program.

Below are three background checking gaps that the Small Business Spotlight report revealed. See how implementing these basic best practices to close the gaps can improve background checking programs for small business.

Gap # 1: Over-Reliance on Pre-Hire Criminal Background Checks
The Small Business Spotlight reveals that many employers are only running a criminal background check during the pre-hire process. This limited background checking approach may eliminate certain applicants, but it also leaves the employer exposed to potentially serious risks.

If an employer only runs a pre-hire criminal background check, any future offenses may go unnoticed by the employer. Some employers will only check a federal database for criminal records, and this information is often irregularly updated and incomplete.

Best Practice to Close this Gap:
Small business employers should consider checking county, state and federal databases for criminal offenses going back several years. For even more comprehensive results, employers can combine criminal record background checks with identity, motor vehicle, sex offender and other background searches.

To improve the efficacy of criminal checks, employers should implement periodic background checks for current employees and implement pre-hire and periodic screening for temporary or contingent workers as well.

Gap # 2: Minimal Use of Drug, Alcohol and Health Screenings
According to the Small Business Spotlight report, only half of small business employers require drug, alcohol and health screening tests. In 2012, only 19 percent of small business respondents said they plan to create a policy for drug, alcohol and health testing and another 13 percent plan to implement such a screening program.

Medical marijuana usage has been legalized in more than a dozen states and is being debated in several other state legislatures. Yet, this substance remains a schedule one drug banned by the federal government.

Best Practice to Close this Gap:
Organizations can help protect themselves against the gray areas of medical marijuana regulations and the risks of drug use in the workplace, by drafting a drug-free workplace policy and implementing a drug and alcohol testing program. A policy coupled with a testing program may reduce absenteeism, increase safety and productivity and help to mitigate legal and compliance risk.

Gap # 3: Unprepared to Meet Stricter Form I-9 Requirements
A quarter of all small business respondents said they have either found a potential employee that was ineligible to work or the employer knows someone who has discovered a worker was not authorized to work. Yet, only 28 percent of employers responded that they use E-Verify to verify work authorization and only 14 percent have plans to use it in the future. That means that more than half of all small business employers are not doing all they can to maintain employment eligibility compliance.

State and federal lawmakers continue to introduce legislation that would mandate the use of E-Verify. A handful of states, such as Arizona, have already passed laws requiring every new worker to be screened using E-Verify.

Employers that do not voluntarily adopt and integrate E-Verify into their existing I-9 solution, will be left struggling to meet this requirement should legislation pass in their state or on a federal level. A failure to meet worker eligibility regulations could result in steep penalties from US Immigration and Customs Enforcement.

Best Practice to Close this Gap:
An automated background checking solution provider can integrate E-Verify checks into its I-9 solution. Small businesses working with an automated solutions provider will be able to make the change to E-Verify quickly and cost-effectively and best reduce their compliance and discrimination risks.

By reviewing your current policy against these three common gaps in background checking for small business, you will be on your way to a more effective and compliant program that will help to ensure a safer workplace, better quality of hire, and reduced risk.

Download: The 2016 Small Business Spotlight Report
HireRight's
2016 Small Business Spotlight Report

Best practices and trends in background checks for small businesses.

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HireRight

HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.

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