7 Good Reasons to Conduct Employee Background Checks

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5 September 2023

7 Good Reasons to Conduct Employee Background Checks

Employee background checks protect the safety and financial security of your company. They can also protect your existing employees and the public. Background checks provide you with the uncensored and comprehensive information that you need about candidates, information you can’t get solely from resumes and interviews. (Learn more in 8 Best Practices for Background Screening).

As an employer you have the right to verify all information provided to you by a job candidate. You have the right to perform background checks including criminal records checks, credit checks, drug testing and alcohol testing. You can also request medical assessments.

Employees have the right to refuse consent to perform these background checks, but their refusal essentially gives you permission to remove them from the competition for the job.

The more knowledge you have, the better decisions you’ll make, and this is especially true of hiring decisions. Here are just a few of the reasons to consider making employee background checks part of your hiring process.

They save you money

Hiring the wrong person can be costly. Training and on-the-job training for new employees costs, on average, $1,200 per new hire and that number jumps substantially for salaried employees. Some estimates put that cost at six to nine months salary, meaning that a salaried employee making $60,000 could cost $30,000 – $40,000 to train.

The high cost of on-boarding new employees and the equally high costs associated with the recruitment efforts needed to replace new employees mean you want to hire the right person the first time. Background checks can help ensure this by checking everything from a candidate’s education (through an education verification) and experience claims to their criminal record.

Hiring the wrong person can translate into additional, expensive retraining or coaching or, in some circumstances, to a decision to simply let the employee go. The latter can be time consuming, drain precious resources and can translate into additional expenses in terms of compensation or litigation.

Over time, a comprehensive screening process that involves background checks is likely to improve the quality of your applicants and reduce the number of unqualified applicants and those who may attempt to finesse their qualifications. Information on company screening processes is well publicized on sites such as Glassdoor and it won’t take long for the information to get out that your company is serious about background checks.

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They protect your company from losses

Performing background checks on your new employees provides tangible proof to regulators, courts and even customers that you are performing due diligence. You have a duty to your employees, customers and to the public to provide a safe working environment and in order to do that you need to know everything you can about the people you are bringing into your workplace. Background checks are your best defence for Negligent Hiring Liability, a legal premise which holds companies accountable both for what they know about an employee and what they should have known about an employee.

Background checks will also reveal information that will protect you from additional liabilities. If that new driver you hire has a history of DUIs, you may be held liable if they get into another alcohol-related accident, whether or not you knew about that history.

Comply with government and insurer requirements

Company policy can dictate specific security requirements that background checks can assist you in meeting. Many regulatory bodies, insurers and even certain customers may also insist that you conduct background checks on your employees. It is often a good idea to go beyond the minimum requirements of these checks in order to ensure that your company does not run into any future difficulties which respect to these organizations.

Protect your company’s assets

Employee fraud and theft is a pervasive issue in modern workplaces and can range from the theft of office supplies to million-dollar misappropriations of funds. While a background check that includes criminal history does not definitely ensure that the person you are hiring will not commit a crime, past actions can help you predict future behavior. The background check also provides tangible proof, once again, that you have done due diligence. (Learn more in Court Ruling in Background Checks: What Rulings Matter Beyond Guilty or Not Guilty?)

A thorough background check of a potential employee’s resume and interview claims can also provide you with useful insight. The last thing you want to do is hire an employee that you know you can’t trust.

Keep your employees, and the public, safe

The onus often falls on you, as an employer, to ensure a safe workplace. Workplace violence has received a lot of recent attention in the media and for good reason. Homicides in the workplace are relatively rare but they remain a leading cause of death in workplaces, second only to vehicle accidents, and are the leading cause of death for women in the workplace. Simple assault is far more frequent and accounts for about 80% of all incidents of workplace violence. The direct cost of absenteeism due to workplace violence has been pegged at $55 million. Factor in additional costs such as litigation and a tarnished public image and that failure to do appropriate background checks on your employees could prove very expensive for your company.

Background checks that include a thorough check of the criminal records and workplace history of potential employees can help you maintain a safe, violence-free workplace. It can also help you keep customers and the public safe. You’ll want to know, for example, if the person you are putting in charge of company accounts has a history of fraud and that the employees that you are granting access to customer records or homes are safe and trustworthy.

They can ensure your company’s productivity

Workplace violence also has an effect on company productivity, consuming resources and preoccupying both management and witnesses to the crime. A good background check can also reveal other potential issues with respect to productivity. Past job performance, for example, is a good indicator of future productivity.

Absenteeism has a direct impact on your company productivity and again, this is information that can be revealed in a background check.

Prevent drug and alcohol related problems

In addition to productivity, employees with drug and alcohol issues are a potential risk for a host of other workplace issues including increased absenteeism, workplace violence and indirect costs associated with rehabilitation and reassignment for safety-sensitive positions. Creating a zero tolerance policy that starts with the hiring process is the best way to keep your workplace drug and alcohol free. For Department of Transportation (DOT) regulators, pre-employment drug and alcohol testing is a requirement. Depending upon the nature of your workplace and the position you are hiring for, you can require drug and alcohol testing pre-employment or as a condition after you have extended an offer of employment.