Background checks are an important part of an employer’s due diligence when evaluating job applicants. Thorough background investigations protect the business, the employees, and the customers. For some job roles, they protect public health and safety.

1. Delays Are Easing Up–So Don’t Stop Doing Background Checks!

However, some small business owners are considering whether to stop doing background checks because they have become more complicated and time-consuming in the past two years. Hurdles include pandemic-related court backlogs and a patchwork of regulations. In addition, many small businesses are limited by short-handed hiring teams. Fortunately, courts and other government agencies are working to get their records up-to-date. And while some new laws delay the process, some states (like California) are considering bills designed to make things easier.

Recruiters and hiring managers that don’t have the resources to perform them on their own should consider a professional service. It does make the hiring process more expensive, but the cost is far less than making a bad hire.

The U.S. Department of Labor estimates that a bad hire costs the employer up to 30% of their first-year earnings. In a CareerBuilder survey, 3 in 4 small business respondents reported having hired the wrong employee for a position, with costs ranging from $1,000 to $10,000.

2. A Negative Background Check Experience Can Drive Candidates Away

Despite economic uncertainty, the talent market is still ultra-competitive. Job seekers have many options. The companies that win the war for talent have an attractive employer brand and a candidate experience to match.

Any bottleneck or inconvenience in the hiring process–including a lengthy or confusing background check process–increases the risk of the candidate withdrawing their application.

There are two main ways to prevent delays in the background check process. First, if the employer and candidate work together diligently to complete the required release forms and authorizations, the process can proceed more smoothly. Second, candidates can prevent delays by ensuring all submitted information is accurate and correct to the best of their knowledge. Indeed

According to LinkedIn, the average time to hire is 41 days. How does your company compare? Is your background screening stage a bottleneck in your process?

In a CareerBuilder survey, 38% of respondents reported losing a candidate because they had a negative experience with their background check; however, less than half of HR managers who conduct background checks (44%) have tested their background check experience themselves. When employers do test their process, they identify a less than ideal candidate experience, with around 1 in 6 (14%) rating their background check candidate experience as fair or poor.

3. There Are New Background Check Laws

Employers need to stay abreast of the employment laws in the locations where they have employees working–including remote employees. Multiple hiring laws impact background checks, including criminal records checks, drug tests, driving records, and credit reports. Let’s discuss some of them.

According to the National Employment Law Project research, 37 states, the District of Columbia, and numerous cities/counties have recently enacted or modified laws that affect employment screening in general and various types of background reports.

Cannabis Screening Laws

In 2022, Virginia, Connecticut and Philadelphia modified cannabis screening laws. Connecticut’s new employment regulations went into effect July 1, 2022. The law prevents employers from penalizing a job applicant who used marijuana prior to being hired. If an existing  employee tests positive for cannabis, the employer can’t take adverse action unless they had a written drug policy in place before the test. Note, however, that there are exceptions for drug background checks for positions that affect public health and safety.

As with Connecticut, the Virginia law also went into effect July 1, 2022. The Virginia law prohibits employers from taking adverse action against applicants for the legal use of cannabis oil. The law also requires current employees to obtain a written certification from a medical provider verifying that cannabis oil use is prescribed to treat a health condition.

Effective January 1, 2022, Philadelphia employers are prohibited from requiring job applicants to undergo pre-employment tests for cannabis use. Visit the City of Philadelphia website for more information on how this impacts background checks.

State and City Fair Hiring Laws

Some states and cities have passed laws that expand on federal regulations that affect background checks..

Effective August 2021, Louisiana restricts employers from considering an applicant’s arrest record or non-convictions in hiring decisions. If an employer believes criminal history could affect job performance, they can get an individual assessment from the Equal Employment Opportunity Commission to obtain permission to conduct a criminal background check.

As of October 2021, Maine prohibits recruiters from asking about criminal history on applications. The law also bans job applications from saying candidates with criminal histories should not apply or will be eliminated. However, federal or state laws require criminal background checks for certain employment.

Effective April 2022, an amendment to Philadelphia’s Fair Criminal Record Screening Standards (FCRSS) broadens the scope to cover both independent contractors and gig workers. Philadelphia’s FCRSS prohibits asking job applicants about their criminal history on applications and/or in interviews.

Changes to the New York City Fair Chance Act became effective July 29, 2022. The law requires employers to conduct all non-criminal background screenings prior to making a conditional offer. In contrast, companies can only conduct criminal employment background checks and driving history checks after making an offer.

Note also that California employers are subject to the California Fair Chance Act which went into effect in 2018.

Date of Birth (DOB) Laws

Both Michigan and California added restrictions regarding using an applicant’s date of birth and other information during background screens. Note, however, that California’s provisions have been challenged and are working their way through the courts. If you are based in California or have employees working in the state, stay apprised of the latest rules.

Michigan previously had a DOB redaction rule, but as of April 1, 2022, employers can use an applicant’s DOB with their permission to access criminal databases or for confirming identity.

Salary History Bans

While not directly applicable to employment background checks, be aware that at least 14 states have laws that prohibit employers from asking job candidates their salary history, and 20 states and Washington, D.C. offer protections for employees to discuss compensation.

Fair Credit Reporting Act

Though not a new law, the Fair Credit Reporting Act (FCRA) applies when employers hire a third-party service agency to conduct employment consumer credit reports and other investigative reports. The Federal Trade Commission (FTC) enforces the FCRA.

When in the Recruiting Process Should I Do Background Checks?

The size of your company, the job role you’re hiring for and your industry influence the timing of both background screening and reference checks. If you field hundreds of applications, there are advantages to doing reference checks before the interview stage. It will help you narrow down the applicant pool earlier in the process.

For higher level positions, it’s customary in most industries to delay a background check until the final stages. This could be immediately prior to the formal job offer – and some companies don’t do a background check until they’ve extended a conditional offer.

Verified First Integrates With ApplicantStack for Streamlined Background Checks

Background checks are an essential step in the employment process–and automation saves time and money. With the one-click ApplicantStack-Verified First integration, ApplicantStack users can manage Verified First background checks from within the software. Learn more at Background Screening with ApplicantStack and Swipeclock.

Verified First is known for their speedy turnaround times and excellent service from a U.S.-based team of specialists. In fact, Verified First has a 96% client satisfaction rate!