How to Conduct Background Checks for Small Businesses: An Employer Guide
A small electrical service company is growing fast and plans to hire an office manager and another electrician soon. But with that growth comes questions. What background checks should they do? What are the steps involved? How much time will it take? And how much extra work will it add?
A background check for small businesses can help employers make confident hiring decisions without turning screening into another full-time job. In this article, we’ll show you how to determine what you need and how a screening partner can help.
What Should a Small Business Include in a Background Check?
A background check won’t look the same for every applicant you hire. Instead, the screening package should match the job. Consider what the person will do, what information they’ll have access to, and what qualifications they need to do the job well.
Think about our fictional service company. They need an office manager to handle customer information and input financial data. At the same time, they’re looking for an electrician who will go into customers’ homes on a regular basis. Those two roles have different responsibilities and risk profiles, so they require different levels of screening.
Depending on the role, a background check for a small business may include:
- Identity verification: This check helps confirm that a candidate is who they say they are. It also makes sure you’re screening the right candidate.
- Criminal history: A criminal history background check can provide relevant information about felony and misdemeanor convictions from federal, state, and local sources.
- Employment and education verification: These checks can confirm academic qualifications, licensure, and relevant experience when it matters for the position.
- Motor vehicle record (MVR) check: This screening checks a candidate’s driving history, including accidents, tickets, offenses, and license status.
- Reference check: A candidate’s references can give you more insights into their experience, performance, and work ethic.
- Drug testing: This screening tests a candidate for substance use, which can help to comply with industry requirements or maintain a safe workplace.
Some of these small business background check services, like identity verification and criminal history, are fairly standard. Others, like MVR checks, may be optional depending on the position you’re hiring for.
Why Small Business Background Screening Matters More Than You Might Think
At a small company, every employee can have an outsized impact. The same person who greets and checks in customers at the front desk may also access sensitive data and handle company funds.
At the same time, small businesses often have less bandwidth for human resources and compliance matters, especially when those tasks fall to a single person. And on small teams, even one wrong hire can create disruptions and lower morale.
Together, these factors make background checks essential for small businesses. As you consider how to implement a background screening process, keep these things in mind:
Some Roles Carry More Risk
Some positions in a small business may carry more risk than others. For example, a store manager who controls cash deposits and keeps employee records has a higher risk profile than a sales associate who helps customers on the floor. Choosing a relevant screening package for each position can give you the information you actually need to make an informed hire.
You Don’t Need to Be a Background Screening Expert
If you already wear many hats, you don’t need to add “background screening expert” to your list. However, you do need to comply with applicable background check compliance requirements, including the federal Fair Credit Reporting Act (FCRA) and state or local regulations where you hire. It’s helpful to build those requirements into your background screening program and work with a screening partner or legal counsel for additional guidance.
Hiring Twice Is Expensive and Time-Consuming
When you’re already stretched thin, making the wrong hire can cost valuable time you don’t have. You’ll be back at square one, restarting the process of recruiting, interviewing, and onboarding. Plus, it’s expensive to go through all of that again. A comprehensive background screening process can help you avoid those mistakes and make the right hire the first time.
How to Run a Background Check for Small Businesses
You may know you need to run background checks, but how does it really work in practice? Let’s go through it step by step, using our fictional service company as an example.
1. Choose the Background Check for the Job
More than likely, you don’t need to perform every background check for each applicant you screen. Think about what the person will be trusted to do in the role, and then choose the screening that makes the most sense.
The HR manager for our small service business may decide to run a criminal history search and employment verification for an office manager candidate, since the role involves handling customer data and financial information. For an electrician candidate, the HR manager may perform a criminal history search, license and employment verification, and an MVR check, since the electrician will drive a company vehicle to customers’ homes.
2. Notify the Candidate and Get Authorization
The federal FCRA requires you to notify a candidate and get their consent before you conduct a background check. This disclosure must be a written stand-alone document that you provide to the applicant. You also need to get their authorization and signature, ideally on a separate consent form.
3. Run the Check Through a Screening Partner
Next, a screening partner will conduct the background check on your candidate. Behind the scenes, a screening partner can support your team by giving you a real person to contact when questions come up. They can also help applicants through the background screening process to improve the candidate experience.
4. Review the Results
Some background check reports come back with no results. But when there’s an item that gets flagged, what do you do?
An item on a background check report shouldn’t automatically disqualify the candidate. Instead, your small business should follow a fair and consistent process that integrates federal, state, and local requirements.
When considering an item on a criminal history report, for example, guidance from the Equal Employment Opportunity Commission (EEOC) advises employers to consider three factors:
- The nature and seriousness of the offense
- How much time has passed
- The nature of the job
If our fictional HR manager sees an item on the electrician’s background check report, they should review that information in the context of the role before making a snap judgment or rushed decision.
5. Follow Adverse Action Requirements
If you eventually decide the information in a background check report is grounds for disqualifying the candidate, the FCRA requires you to follow a specific process. It’s known as the adverse action process, and it includes these steps:
- Provide a pre-adverse action notice, including a copy of the background check report and a summary of the candidate’s rights.
- Give the candidate time to respond.
- Send a final adverse action notice to the candidate.
This process should be part of your background screening policy. It can help remove some uncertainty during a potentially delicate hiring moment.
Questions to Ask a Background Screening Partner
When searching for background check companies for small businesses, it’s easy to get overwhelmed by the results. Knowing which questions to ask can go a long way in helping you evaluate potential partners. These can include:
- Can you help us determine which checks are needed for specific roles?
- Will you tell us if we’re paying for a search we probably don’t need?
- Can our screening packages change as the business grows?
- Who do I contact if I have a question about a report?
- What support does the candidate get if they have a question?
Pay close attention to the answers a screening provider offers. The right partner should make the process easier to understand while learning more about how your business operates and what support you actually need.
FAQs
How long does a small business background check take?
Background checks take an average of one to three business days, but turnaround time can vary based on scope, availability of information, source response times, and potential discrepancies. If your candidate needs to start on Monday, ask your provider what could affect timing.
Do small businesses need background checks for every employee?
It depends. Background checks may be legally required for some positions or industries, especially in regulated sectors like finance and healthcare. Even when not legally required, background screening can offer valuable information about a candidate to help you make better hiring decisions.
Should every position have the same background check?
No. You should choose checks based on a position’s responsibilities and requirements. It’s best practice to have documented screening criteria for comparable roles that you can apply consistently.
Build a Small Business Background Check Program with InCheck
With a simple and repeatable background check process in place, our small electrical service company can make their next hires with confidence. The HR manager knows which screening packages to order for the office manager and electrician, and they understand how to follow the required steps and evaluate results fairly.
If you’re ready to build a small business background check program, InCheck can help. Our team can work with you to determine what screening your roles require and build a program around your hiring needs. We focus on tailored recommendations for your small business, with personalized support every step of the way. Contact us to talk through your hiring needs today.