Why Do Employers Do Background Checks? A Comprehensive Guide

Background checks have become a standard part of the hiring process, with 95% of employers using them to guide critical employment decisions. But why do employers do background checks in the first place? From verifying qualifications and work history to identifying potential risks, background screening helps ensure that new hires are trustworthy, capable, and a good fit for the role. The hiring manager plays a crucial role in this process, assessing candidates’ qualifications and integrity to make informed hiring decisions.

Whether you’re a job seeker preparing for a screening or an employer refining your hiring process, understanding how and why background checks are used can give you the clarity and confidence you need. Let’s take a closer look at what these checks involve and why they matter more than ever.

What is a Background Check?

A background check is a structured process employers use to verify a job candidate’s identity, qualifications, and history to make informed hiring decisions. While once limited to reference calls and education checks, modern background screenings are now conducted by specialized agencies and can include criminal records, credit history, identity verification, and even social media reviews. Often referred to as “pre-employment screening” or “background investigation,” the goal is always the same: to minimize hiring risks and confirm that applicants are who they say they are. These checks significantly influence hiring decisions by helping employers verify candidate information and review relevant facts.

Types of Background Checks

There are various types of background checks, each serving a specific purpose in the hiring process.

• Employment background checks: Verify a candidate’s work history, including previous employers, job titles, and employment dates.
• Criminal background checks: Review a candidate’s criminal record to identify any past convictions or legal issues.
• Credit checks: Assess a candidate’s credit history, revealing information about their financial responsibility and any potential red flags.
• Education verification: Confirms a candidate’s academic background, ensuring that they have the degrees and qualifications they claim.

Additionally, pre-employment background screenings can include reference checks, driving record checks, and social media screenings. The type of background check conducted depends on the industry, job requirements, and employer preferences, helping to ensure that the right candidates are selected for the right roles.

The Legal Framework for Background Checks

Before exploring why employers conduct background checks, it’s important to know they must follow local laws, get written consent, and ensure fair hiring. Due to legal complexities, including drug testing rules, consulting legal counsel helps maintain compliance and avoid penalties.

Several federal and state laws regulate how and when background checks can be performed:

• Fair Credit Reporting Act (FCRA): The Fair Credit Reporting Act (FCRA) requires employers to get written consent, notify candidates, and follow specific steps before taking action based on third-party background checks.
• Equal Employment Opportunity Commission (EEOC) Guidelines: The EEOC enforces anti-discrimination laws and advises employers to use background checks fairly by avoiding bias, reviewing criminal records individually, and considering each case carefully.
• Ban-the-Box Laws: Many states have “ban-the-box” laws that prohibit employers from asking about criminal history on initial job applications, delaying such questions until later in the hiring process. Failing to comply can lead to fines or legal action, so staying up to date on these laws is essential.
• Written Notice Requirements for Drug Testing: Some states mandate employers to provide written notice or indicate drug testing requirements in job postings, particularly in the context of evolving legislation regarding marijuana use.

Primary Reasons Employers Conduct Background Checks

Now that we understand what background checks are and the legal framework governing them, let’s explore the primary reasons why employers invest time and resources into conducting them.

Improving Workforce Quality

Employers conduct background checks to confirm a candidate’s education, experience, and credentials, helping to spot misrepresentations and ensure a good fit. Education history verification provides details on schools attended and qualifications earned, giving employers confidence in their hiring decisions. This process reduces turnover, lowers training costs, and supports a stronger, more reliable workforce.

Ensuring Workplace Safety

Background checks help promote workplace safety by identifying candidates with violent histories or other red flags. In high-risk fields like healthcare or transportation, adding drug screening strengthens this protection. Careful screening helps reduce incidents and safeguard employees, customers, and the public.

Protecting Company Assets and Reputation

Every hiring decision affects a company’s assets and reputation, and background checks help protect both. By identifying candidates with histories of theft, fraud, or misconduct, employers can reduce risks to finances, data, and brand image. A single bad hire can cost over 30 percent of their first-year salary and lead to serious losses, especially for small businesses.

Legal Protection and Compliance

Background checks provide legal protection by showing employers took reasonable steps in the hiring process. They help reduce the risk of negligent hiring lawsuits, support regulatory compliance, and offer documentation of fair, objective decisions. In cases where an employee causes harm, a proper screening process can help shield the company from costly legal and liability claims.

What Information is Included in a Background Check?

Background checks can include various types of information depending on the position, industry requirements, and employer preferences. Here’s a breakdown of what might be included:

Identity Verification

Identity verification is the foundation of any background check, confirming that candidates are who they claim to be. It includes validating names, aliases, address history, Social Security Number, and employment eligibility, helping prevent identity fraud and ensuring the correct individual is being screened.

Criminal History

Criminal history checks often include federal, state, and county records, sex offender registries, and incarceration history. Most go back seven years, though this varies. Employers should review court records carefully, considering the offense’s nature, timing, and relevance to the job.

Employment Verification

Employment verification confirms a candidate’s work history by checking former employers, job titles, dates, and reasons for leaving. It helps identify résumé fraud and ensures the candidate has the experience they claim. With up to 85 percent of employers reporting discrepancies, this step is key to making informed hiring decisions.

Education and Credential Verification

Education verification confirms a candidate’s academic background, including degrees earned, institutions attended, and graduation dates. Employers assess educational history alongside other aspects of a candidate’s background to ensure the accuracy of academic credentials.

Credit History Checks

Credit history checks reveal payment habits, debts, and bankruptcies, making them useful for finance-related roles. They help assess financial responsibility but must be used carefully due to state restrictions. Employers should ensure compliance when including credit checks in hiring.

Driving Records

Motor vehicle record checks are essential for roles that involve driving, providing details on license status, violations, DUIs, accidents, and suspensions. Clean records are especially important for drivers, sales reps, and others operating company vehicles, as poor histories can raise insurance costs and increase liability risks.

Professional References

Professional reference checks involve speaking with former supervisors or colleagues to gain insights into a candidate’s work performance, character, strengths, communication skills, and leadership. Unlike objective verifications, these checks offer valuable qualitative perspectives on how the candidate functions in a real-world setting.

Social Media Screening

With social media now a major part of daily life, many employers conduct searches of candidates’ public profiles as part of background checks to identify discriminatory content, illegal activity, or unprofessional behavior. These reviews help assess a candidate’s judgment and character.

The Background Check Process

Understanding how the background check process typically unfolds can help both employers and job seekers navigate this crucial step in the hiring journey.

When Background Checks Occur

Most employers conduct background checks after extending a conditional job offer but before finalizing employment. Pre-employment screenings are crucial in ensuring compliance with various background check laws and regulations. This approach allows employers to focus on candidates they’re seriously considering while complying with laws that restrict when certain information can be sought.

Obtaining Consent

Before using a third-party for a background check, employers must provide a clear, stand-alone disclosure, obtain written consent, and give additional notices if credit checks are involved. Employers are legally required to obtain written permission before conducting periodic checks, ensuring compliance with regulations. These FCRA requirements ensure candidates are informed and have authorized the screening.

Typical Timelines

The timeline for completing background checks depends on the scope of the search. Basic checks may take 2 to 3 business days, while more detailed screenings typically require 5 to 7 days. Checks involving international verification or court records can take several weeks.

Delays often result from factors like courthouse backlogs, school closures, or difficulty reaching past employers. Accessing public records for criminal history, education, and employment also affects how quickly results are returned.

Communication of Results

If an employer plans to take adverse action based on a background check, they must provide a pre-adverse action notice with the report and a summary of rights, allow time for the candidate to respond, and issue a final notice if action is taken. This ensures candidates can correct errors or explain the findings.

Red Flags Employers Look For

While each employer has different criteria for evaluating background check results, certain findings commonly raise concerns:

Dishonesty on Applications

One of the biggest red flags in a background check is dishonesty, such as falsified education, fake job history, inflated roles, or hidden criminal records. These issues signal a lack of integrity that often disqualifies candidates.

Criminal History Concerns

When reviewing criminal history, employers consider the nature of the offense, how long ago it occurred, and its relevance to the job. Arrest records older than seven years are federally protected under the Fair Credit Reporting Act (FCRA) and cannot be used by employers. Recent or job-related offenses like violence, theft, or fraud are especially concerning.

Employment Inconsistencies

Employment history red flags include unexplained gaps, frequent short-term jobs without growth, unverifiable roles, and conflicting reasons for leaving. These may point to performance or stability issues.

Negative Reference Feedback

Though reference checks are subjective, repeated negative feedback, such as performance issues, attendance problems, or policy violations, can raise concerns. Employers usually consider this alongside other background findings.

How Job Applicants Should Prepare

For job seekers, preparation is key to navigating the background check process successfully:

• Self-Check Your Records: Before your job search, review your credit, background, driving record, and online presence to identify and address any potential issues in advance.
• Be Honest and Transparent: Be honest and accurate in your application, as employers will verify details like job titles, dates, and experience. Transparency builds trust and helps avoid issues during background checks.
• Know Your Rights: Know your rights by understanding that you must give consent for background checks, can access your report, dispute errors, and may have added protections depending on your state.
• Clean Up Your Social Media: With social media screening common, clean up your online presence, adjust privacy settings, and ensure your posts reflect a professional image.

Conclusion

Background checks are a vital part of today’s hiring process, helping employers make informed decisions while protecting their workforce, assets, and reputation. From verifying qualifications and work history to uncovering potential red flags, these checks provide a clearer picture of who a candidate really is. By understanding the purpose, process, and legal requirements behind background screenings, both employers and job seekers can approach the hiring journey with greater confidence and clarity.

At Sapphire Check, we specialize in pre-employment background checks that help you make informed hiring decisions. Our comprehensive background screening process covers everything from criminal history to professional license verification, giving you the confidence to build a trusted team. Whether you’re hiring for sensitive roles or ensuring compliance, our fast and reliable services are here to support you. Contact us today to streamline your hiring process with confidence.

FAQs

Why is background checking important?

Background checks are important because they helps employers make informed employment decisions, verify candidates’ qualifications, and comply with federal law requirements. It protects workplace safety, company assets, and helps organizations avoid negligent hiring claims that could result in costly liability.

What background checks do most employers do?

Most employers typically conduct criminal background checks, identity verification, employment verification, and education verification as standard practice. Consumer reporting agencies often compile background check reports that include criminal convictions, employment history, and educational credentials, with specific combinations varying by industry and position requirements.

What is the background check for pre-employment?

Pre-employment background checks are screenings conducted before finalizing a hiring decision to verify information provided by job candidates and uncover potential issues. These comprehensive reviews typically include criminal records, employment history, reference checks, and sometimes credit history, depending on the position’s responsibilities and regulatory requirements.

What happens after a background check?

After a background check, the employer reviews the background report and decides whether to proceed with the hire based on their screening criteria. If concerns arise, the employer must follow proper procedures for adverse action, giving the candidate time to dispute inaccuracies before making final employment decisions as required by the Fair Credit Reporting Act.