A background check or background investigation is the process of looking up and compiling criminal records, commercial records and financial records (in certain instances such as employment screening) of an individual.
Background checks are often requested by employers on job candidates, especially on candidates seeking a position that requires high security or a position of trust, such as in a school, hospital, financial institution, airport, and government. These checks are traditionally administered by a government agency for a nominal fee, but can also be administered by private companies. Results of a background check typically include past employment verification, credit score, and criminal history.
These checks are often used by employers as a means of objectively evaluating a job candidate's qualifications, character, fitness, and to identify potential hiring risks for safety and security reasons. Background check is also used to thoroughly investigate potential government employees in order to be given a security clearance. However, these checks may sometimes be used for illegal purposes, such as unlawful discrimination (or employment discrimination), identity theft, and violation of privacy.
Pre-employment screening refers to the process of investigating the backgrounds of potential employees and is commonly used to verify the accuracy of an applicant's claims as well as to discover any possible criminal history, workers compensation claims, or employer sanctions.
A number of annual reports, including BDO Stoy Hayward's Fraudtrack 4 and CIFAS's  (the UK's fraud prevention service) 'The Enemy Within' have showed a rising level of major discrepancies and embellishments on CVs over previous years. Such business fraud cost United Kingdom businesses $1.4 billion in 2005..
Almost half (48%) of organizations with fewer than 100 staff experienced problems with vetted employees.
Thirty-nine percent of UK organizations have experienced a situation where their vetting procedures have allowed an employee to be hired who was later found to have lied or misrepresented themselves in their application.
Since the onset of the Financial crisis of 2007–2010, the level of fraud has almost doubled and some experts have predicted that it will escalate further. Annual research by Powerchex has also shown that the number of applicants lying on their applications has been increasing steadily since the summer of 2007 when the financial crisis of 2007–2010 began. As of August 2009, nearly one in 5 applicants have major lie or discrepancy on their application.
Larger companies are more likely to outsource than their smaller counterparts – the average staff size of the companies who outsource is 3,313 compared to 2,162 for those who carry out in-house checks.
Financial services firms had the highest proportion of respondents who outsource the service, with over a quarter (26%) doing so, compared to an overall average of 16% who outsource vetting to a third party provider.
The construction and property industry showed the lowest level of outsourcing, with 89% of such firms in the sample carrying out checks in-house, making the overall average 16%. This can increase over the years.
The Financial Services Authority states in their Training & Competence guidance that regulated firms should have:
The Financial Services Authority’s statutory objectives:
The FCRA (Fair Credit Reporting Act) is the most important regulation governing background screening.
Due to the sensitivity of the information contained in consumer reports and certain records, there are a variety of important laws regulating the dissemination and legal use of this information. Most notably, the Fair Credit Reporting Act (FCRA) regulates the use of consumer reports (which it defines as information collected and reported by third party agencies) as it pertains to adverse decisions, notification to the consumer or applicant, and destruction and safekeeping of records.
If a consumer report is used as a factor in an adverse hiring decision, the consumer must be presented with a “pre-adverse action disclosure,” a copy of the FCRA summary of rights, and a “notification of adverse action letter.” Consumers are entitled to know the source of any information used against them including a credit reporting company. Consumers must also consent in order for the employer to obtain a credit report.
Florida House Bill H0775, passed in 1999, provides protection for employers from negligent hiring liabilities, provided they attempt to conduct certain screening procedures. Employers who follow these steps will be presumed not to have been negligent when hiring if a background check fails to reveal any records on an applicant. These steps are:
There are a variety of types of investigative searches that can be used by potential employers. Many commercial sites will offer specific searches to employers for a fee. Services like these will actually perform the checks, supply the company with adverse action letters, and ensure compliance throughout the process. It is important to be selective about which pre-employment screening agency you use. A legitimate company will be happy to explain the process to you.
Many employers choose to search the most common records such as criminal records, driving records, and education verification. Other searches such as sex offender registry, credential verification, skills assessment, reference checks, credit reports and Patriot Act searches are becoming increasingly common. Employers should consider the position in question when determining which types of searches to include, and should always use the same searches for every applicant being considered for one position.
They are frequently conducted to confirm information found on an employment application or résumé/curriculum vitae. One study showed that half of all reference checks done on prospective employees differed between what the job applicant provided and what the source reported. They may also be conducted as a way to further differentiate potential employees and pick the one the employer feels is best suited for the position. As workplace violence becomes more of an issue and other serious concerns since the September 11, 2001 terrorist attacks, employers are becoming more concerned about the people they hire. Employers have an obligation to make sure their work environment is safe for all employees and helps prevent other employment problems in the workplace.
In the United States, the Brady Bill requires criminal checks for those wishing to purchase handguns from licensed firearms dealers. Restricted firearms (like machine guns), suppressors, explosives or large quantities of precursor chemicals, and concealed weapons permits also require criminal checks.
Checks are also required for those working in positions with special security concerns, such as trucking, ports of entry, and airports (including airline transportation). Other laws exist to prevent those who do not pass a criminal check from working in careers involving the elderly, disabled, or children.
The amount of information included on a background check depends to a large degree on the sensitivity of the reason for which it is conducted—e.g., somebody seeking employment at a minimum wage job would be subject to far fewer requirements than somebody applying to work for a law enforcement agency such as the FBI or jobs related to national security.
Drug tests and credit checks for employment are highly controversial practices. According to the Privacy Rights Clearinghouse, a project of the Utility Consumers' Action Network (UCAN): "While some people are not concerned about background investigations, others are uncomfortable with the idea of investigators poking around in their personal histories. In-depth checks could unearth information that is irrelevant, taken out of context, or just plain wrong. A further concern is that the report might include information that is illegal to use for hiring purposes or which comes from questionable sources."
In the case of an arrest that did not lead to a conviction, employment checks can continue including the arrest record for up to seven years, per § 605 of the Fair Credit Reporting Act:
Subsection (b) provides for an exception if the report is in connection with "the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more".
Some proposals for decreasing potential harm to innocent applicants include:
In New Zealand, criminal checks have been affected by the Clean Slate Act 2004, which allows individuals to legally conceal "less serious" convictions from their records provided they had been conviction-free for at least seven years.
In Michigan, the system of criminal checks has been criticized in a recent case where a shooting suspect was able to pass an FBI check to purchase a shotgun although he had failed the check for a state handgun permit. According to the spokesman of the local police department,
The Brady Campaign to Prevent Gun Violence has criticized the federal policy, which denies constitutional rights based on a criminal check only if the subject has been accused of a crime.
Taking advantage of public records availability in the United States, a number of Web based companies began purchasing U.S. public records data and selling it online, primarily to assist the general public in locating people. Many of these sites advertise background research and provide employers and/or landlords with fee-based checks.
There has been a growing movement on the web to use advertising-based models to subsidize these checks. These companies display targeted ads next to the reports delivered to landlords or employers. Some of the reports provided by these pay sites are only expanded versions of a basic people search providing a 20 year history of addresses, phone numbers, marriages and divorces, businesses owned and property ownership. Usually, these sites will also provide a nationwide criminal report for an added charge.