Your Guide to Creating a Background Check Policy

How to start a screening process to secure top talent and improve the candidate experience

Employment background screening is an often overlooked aspect of the hiring process. In recent years, this complacent mind set had led to a heavy increase in litigation. Both small organizations and corporate giants with entire legal departments are falling prey to costly class action lawsuits because of non compliant employment screening practices. We’ve created this guide to give you all of the info you need to create a compliant screening policy for your organization.

Chapter One: Crafting a Policy That Fits Your Organization


Creating a background check policy may seem daunting but it’s a crucial step to expedite the screening process in a compliant way. Every organization is different and all have unique screening needs. As such, don’t settle for a cookie cutter policy. Take care to think about what your needs are when getting started on creating your employment background check process.


The Fair Credit Reporting Act

Understanding the regulatory environment that employment screening firms operate under will help you on your way to expediting the screening process. By developing a policy that accounts for the different nuances of regulatory requirements, you’ll be well equipped to keep your applicants informed and keep the ball rolling if there’s a need for additional information.

As the name implies, the Fair Credit Reporting Act (FCRA) was originally established to grant consumer protections to those entering into credit related transactions. The statute also created regulatory standards and general operating procedures for companies conducting business with these consumers. Shortly after the FCRA’s adoption, the interpretation of the statute was expanded to include the background screening industry.

Employers who screen employees, applicants, volunteers, or contractors using a CRA are required to follow the end user requirements of the FCRA. Basically, any time you run a background check/pre employment check on an individual for employment purposes, the FCRA applies.

obligations under the FCRA


Your company’s policy

Having a company policy in place gives clarity to a background check. It allows you to know exactly what to look for on the report for a potential or current employee. For example, if there is a home cleaning company that requests a background check on a potential employee and a “hit” comes back that reveals that the potential employee has been arrested for home burglary, then your company policy should tell you whether or not that offense is acceptable for that position. Having a company policy in place and using a screening agency that gives you accurate and detailed consumer reports is key to the success of your company to ensure you’re making the best hiring decisions, but to also provide your company with a defense if you ever have to turn away a potential employee. The key is to think about your organization and how particular offenses could impact the nature of business that you can conduct.


What goes into creating a company policy?

Before starting the background screening process, it is crucial that you create a policy that outlines the purpose and scope of your program. The following questions are meant to help shape the foundation of your policy, but are not enough by themselves to create a legally defensible policy.



Why do you need to run background checks on applicants, employees, etc.?



What’s included in a background check for employment? Who will have a background check run on them and how often? What types of background checks will you run? (County Criminal Records, Employment Verification, Credit History, etc.) How will the information be used? How will it affect employment opportunities? Will you use background screening companies for your background checks? If so, which agency? How will you handle disputes and verify the accuracy of information in a report?

Always consult legal counsel before implementing a new employment screening policy. We advise that you consult with an attorney who is well versed in the Fair Credit Reporting Act and Labor/Employment Law.



You will also want to list out the compliance steps for following the Fair Credit Reporting Act. (Don’t worry, we’ll get to that)

A decision matrix is a form with a list of offenses that a company reviews to standardize which offenses are acceptable or not. When filling out the decision matrix, you base your decision on unique needs of the organization and all applicable federal, state, and municipal laws and regulations. Once you have created your decision matrix your company can begin to create a policy.


Need a decision matrix? Check out an example below, and download our full decision matrix template.

Decision Matrix

Download Now » 


Supervisor Training

Once you’ve created a polished background screening policy, you’ll need to train those who will be involved in the hiring process on how to follow it. For managers and supervisors, it’s especially important to train on how to appropriately interpret background information in a way that doesn’t violate your policy. Consistency is key. You don’t want to have your managers independently determining the severity of different offenses. Rely on your decision matrix to keep everyone aligned.

Chapter Two: Not All Background Checks Are the Same


Background checks come in all shapes and sizes

One of the most common misconceptions about the background screening industry centers around a lack of understanding what exactly goes into a background check. Do all background checks come from the same sources? Is it just one central government database that all organizations plug into? If that’s the case, why do some background checks cost more than others and some claim to offer more information than others? The first thing that you must know if you are new to background screening is that background checks come in all shapes and sizes – none of which come from an all-encompassing government database. The source of the information used in a background check plays heavily into the cost, speed, and comprehensiveness of a background check. Information collected from one source may require large amounts of research time or may have a high usage fee. For Example – the average court record fee is $5. It costs $65 for county court records in New York.

average court record fee


Background checks are best categorized by the type of information that they collect

There are thousands of different background screening services. The list of relevant services is made much more manageable by lumping them into categories based on the types of information that they collect.

Common types of background screening information include:

Criminal Records

Criminal Records

Driving Records

Driving Records

Credit Reports

Credit Reports

These different types of background checks each gather information from different sources and are used for different purposes. In general, criminal records will originate from the different court systems in the United States (i.e. municipal, county, or federal). Driving record information will come from state Departments of Motor Vehicles. Credit information used in a credit report comes from many different types of institutions linked to a consumer’s finances. But all three can be used for the employment background check process.


Comparing criminal records to credit reports is like comparing apples to elephants

Comparing high-level categories like credit reports and criminal records won’t get you very far. The only comparison that should really happen is the comparison of how those different types of information would benefit your organization’s screening process. Once you’ve decided on the type of information you want to collect. Your attention should turn towards the differentiators within that single category. For example – criminal record searches have two basic types – databases and live research. While both of these are criminal record searches, their information is gathered in very different ways and have very different draws. If you are focused entirely on price when looking at a line-up of different criminal record checks you may see that one is priced much lower than the others. At face value this may seem like the best option, but like anything else, you get what you pay for. Lower priced criminal record checks come from databases and lack the comprehensiveness of live research.

Chapter Three: Disclosure & Authorization Forms


Disclosure & authorization forms

Employers who conduct background checks on job applicants or current employees are required under the FCRA (Fair Credit Reporting Act) to issue a Disclosure and an Authorization form as a part of their standard business practice. This is law under the FCRA. The Disclosure and Authorization forms may be used in either an electronic or paper format. The FCRA specifically states that employers are required to provide a clear written disclosure form to all employees by informing them that a consumer report/background check may be obtained for employment purposes. In addition, the FCRA requires that employers obtain the consent (authorization) of the potential or current employee before performing the background check.


Let’s turn our attention toward the specific requirements placed upon employers who conduct background checks on candidates and employees. These are the initial steps as stated within the FTC guidance here.


Before you get a background screening report about a prospective employee, disclose to the person that you intend to get the report and then get their written authorization allowing you to do that.

If the background screening report reveals something that may cause you to decide not to hire the person, you must notify them of the results of the report and provide them with a copy. Next, you have to give them sufficient time to review the report so they can challenge any elements that might be incorrect.

If you ultimately decide not to hire someone based in whole or in part on the contents of a background screening report, you must provide a notice to that person that states they weren’t hired due at least in part to the result of the background screening report.


Why are these forms important?

If you’ve made it this far, you’re probably wondering why these forms are important. Well, the Disclosure and Authorization forms are important because the FCRA prescribes that these forms must be used by employers seeking consumer reports on potential or current employees. If employers are actively seeking consumer reports on job applicants and/or existing employees and are not using the Disclosure and Authorization forms, the employer is in violation of the law and risks fines by the FTC and potential lawsuits by the affected consumers. To ensure you are protecting your company, it is imperative that you use these legally approved forms. The Disclosure and Authorization is one of the most common areas of class action litigation. This is because the FCRA has very specific requirements on how the Disclosure and Authorization is supposed to be presented and what documents should be included. The purpose of the Disclosure and Authorization documents are to ensure that the applicant or employee understands that they will have a background check run on them as a condition for employment, promotion, assignment, etc.


Chapter Four: Using Your Policy to Interpret Criminal Records


Criminal records are consumer reports?

According to the (FCRA), the definition of a consumer report is any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used. Quite the definition, but what does it all mean? Once you begin a consumer report (i.e. background check) on a current or potential employee, you are looking for specific “red flags” or “hits” once the consumer report is returned. For example, driving records, credit report, federal offenses etc. but how do you know what’s important? You look to your company policy to see what the standards and expectations are for a current or potential employee.


“But what if I don’t have a company policy?”


If your company doesn’t currently have a company policy then start by using consumer reports, and a decision matrix to begin creating one

decision matrix to begin creating one.


Reviewing your policy

Before making any decisions based on the information contained within a consumer report you should first take a minute to review your organization’s employment screening policy. This will help to ensure that you make consistent decisions based on the information presented in the consumer report.


So what happens when the consumer report returns with a criminal record?

The most import thing to remember if a consumer report comes back with a criminal record is to not react impulsively to the information. If there is a criminal record in the applicant or employee’s report, you will need to review your policy and decision matrix to determine whether or not the offense in the report would preclude the person from being hired, promoted, etc.

If the offense isn’t in your “green column” for acceptable convictions, then you will need to proceed to the next step, considering the individual offense based on the individual circumstances surrounding them. Remember these are things like “job relatedness and consistency with business necessity.” You will want to consider:

Nature and gravity of the offense

Nature and gravity of the offense

Time that’s passed since the offense or completion of the sentence

Time that’s passed since the offense or completion of the sentence

Nature of the job held or sought

Nature of the job held or sought

Chapter Five: Pre-Adverse & Adverse Actions


Pre-Adverse Action

Pre-adverse action notification is required if the consumer will not be hired, will be demoted, is not eligible for a promotion, is terminated, etc. (not an all-inclusive list) based, in whole or in part, on information contained in a consumer report. The pre-adverse action letter and supporting documents must be given to the consumer prior to taking adverse action against the consumer.


Provide the consumer with a pre-adverse action letter, A Summary of Rights Under the FCRA, Remedying the Effects of Identity Theft, a copy of the consumer report that contains the potentially adverse information, and all necessary state-required notices and disclosures (if applicable).


Waiting Period

After sending a pre-adverse action notification, you must wait a “reasonable period” of time to allow a consumer to dispute the information in his/her report prior to the organization taking adverse action based on the report.

The FCRA does not state what constitutes a “reasonable period” of time. Due to varying state laws and FTC opinion, Validity recommends waiting 5 business days (taking into account mailing time). The waiting period is to give the consumer an opportunity to identify errors, inaccuracies, and/or otherwise respond to the information contained in the report. Consider, on a case-by-case basis, those extenuating circumstances that would justify less time or require providing an individual with additional time.


Adverse Action

The final step in the adverse action process. You are required by law to provide an adverse action notification to the consumer prior to taking any adverse action, based in whole or in part, on information contained in a consumer report. For use ONLY after satisfying the pre-adverse action requirements AND waiting period.


Chapter Six: What Affects Turnaround Time

Not all employment screening information comes from the same source and is not collected in the same way. One criminal record report may contain research from several individual county courts and state repositories. This is due to the fact that a proper “background check” is conducted in areas that have been selected from an address history on the subject of the background check. By going directly to the courthouses to inquire about potential criminal records, the background check process is open to inefficiencies that can vary between different court jurisdictions. Add to that the different internal processes among employment screening vendors and there can potentially be a plethora of contributing factors to your turnaround time woes.


“When” you submit your order matters

It is best to submit background check orders as early in the day as possible. A researcher may have 100 names on their research task list by 10 am for high-volume search areas. In most cases, the orders are processed in the order they are received and if your order is at the back of the queue, it may not be processed same day.


Request for additional documentation

Certain types of background checks require additional supporting documentation before they can be researched. This most commonly appears as an additional release form requirement (International Background Checks, State Childhood Abuse and Neglect Searches, etc.). When these additional release forms are required, nothing can be done until the court or agency has a release form. If that release form isn’t provided with the background check, it will cause delays in turnaround time.


Clerk searches

When a criminal record researcher goes to an individual court to find information for a background check, there are a few different ways they may go about this.

Public Access Terminals

Public Access Terminals

Manual Clerk Research

Manual Clerk Research

State Repositories

State Repositories

Many courts provide Public Access Terminals (PATs) that allow the researcher to conduct their search themselves. However, not all PATs are created equally. Some will only note that a record exists – signifying the need for the researcher to conduct a manual search. This slows down the process when a researcher must go through boxes of paper records to find what they are looking for.

Some jurisdictions do not allow non-court personnel to access their records. Instead, agencies are required to file a request that will be filled by a court clerk. Court clerk searches are notorious for slow turnarounds, but to be fair, it isn’t always their fault. In many of these jurisdictions, there is no clerk whose sole job is to process these requests so they must balance this with their regular duties. The main thing to know is that counties with clerk searches are going to take longer.


Court-observed holidays

There are many holidays observed by courts or and state agencies that result in closures or reduced office hours. Common holidays include Martin Luther King Day, Veterans Day, etc. Some courts observe local holidays as well. Naturally, if the court is closed, it causes delays in research turnaround time due to backlogged requests during the downtime.


Tiered court searches

Some areas have tiered court systems. One county may have a traffic, misdemeanor, and felony court. In areas with a tiered system, criminal records are stored in the court that processed the record – not both. As such, a researcher is required to search each tier of the court system in that jurisdiction. Since there are more areas to search, it often adds additional hours to the turnaround time.


Following the guidance outlined above can set you on a path to dramatically reduce turnaround time. It’s how we’ve been doing it for years. By building a process that caters to the varying complexity of employment screening, you’ll be better equipped to react to requests for additional information, quickly make adverse action determination and reduce the amount of time it takes to screen your applicants and employees. Background checks can be stressful, hard to deal with, and very confusing. But they don’t have to be. Using a strong screening service that helps to improve your company’s screening process can give you the peace of mind that your company is hiring the best candidates for your company.

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