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Construction Insurance Bulletin


By May 1, 2011No Comments

In the current economic environment, businesses everywhere are trying to cut expenses anywhere they can. The survival of many businesses will depend on figuring out where and how to save money.

One big expense comes from finding, interviewing and vetting, and training new employees. However, the repercussions of not knowing who you’re hiring can be even more costly. One of the most important elements to hiring a new employee is performing a background check. Just one poor hiring decision can be very costly to most businesses. In fact, hiring decisions can often make the difference between a business failing or thriving. Thirty percent of small business failures are directly caused from employee theft, according to the U.S. Chamber of Commerce.

Pre-screening potential employees thorough a background check is one of the most cost effective tools to protect your business, lessen the risk of hiring unacceptable employees, and make sure that you’re making smart hiring decisions. Here are some key points about background checks:

Liability Protection. Small businesses usually skip performing a background check on a potential employee either because they’ve developed a false sense of trust and ease from working so closely with their employees or because they don’t understand what the legal liabilities can be from not screening and performing background checks. Either way, skipping background checks can open the door to costly legal liability. All businesses that have employees interacting or providing a service directly to customers have a liability if one of their employees harms a customer or has a previous history of wrongdoing. Businesses, especially small to medium ones, often can’t survive after the resulting lawsuit. Aside from the negative aspects, business owners might also find that their insurance provider will offer a discount for performing new hire background checks.

Reputable Vendors. Buying instant public records from a database doesn’t constitute a background check and can still leave you liable. These databases usually don’t do any fact checking or update their existing information with any regularity, if at all.

To best protect yourself, your employees, and your customers, you should find a reputable and trustworthy background screening company. This is the best way to make sure that the data on the potential employee is up-to-date and accurate.

Do keep in mind that since background check vendors come in various shapes and sizes and offer a range of different services, it’s also important to find a vendor that offers the right services for the size and needs of your business. When choosing a vendor, you might want to make sure that a human-manned toll-free number is available to assist you around the clock. You might also want to do a background check of sorts on the vendor by asking for customer reviews and searching for any negative information about the vendor on the web.

The Fair Credit Reporting Act. Sometimes inaccurate data might be found on a background check or an employer might violate a job applicant’s privacy rights; The Fair Credit Reporting Act (FCRA) was set up to guard against such from happening. Compliance involves employers obtaining written consent from the applicant prior to running a background check and notifying the applicant of the source of any background check information used during the hiring process. The latter of the two is where employers get into trouble using databases.

Only Purchase Needed Information. Some vendors will encourage you to purchase anything and everything they find on the potential employee, at a hefty price none the less. If your business niche requires such an extensive background check this is fine, but more often than not a basic background check will suffice.

A Web Search Can Supplement Background Checks. Employers should keep in mind that anyone can put anything that they want to, true or not, on their social network profile, blog, or personal website. So, this type of information should never replace an appropriate background check. That said, many employers are using these portals as a supplement to the background check. A lot can be learned about a person just by reading the types of things they blog or write about on social network sites. You might find a person exhibits just the traits you’re looking for and is passionate about their occupation. On the other hand, someone that updates their blog with a post about how they hate old people might make you think twice before hiring them in your assisted living facility.