Due Diligence: Why Business Owners Need to Do Background Checks

Due Diligence: Why Business Owners Need to Do Background Checks

Background Checks for Business Owners

Here’s a familiar scenario: You’re looking to expand your team, so you post job ads online and spend a few weeks doing interviews. You find a few candidates who are perfect for the positions you need to fill. Now here comes the hard part: Do you run a thorough (and sometimes costly) background check on each new hire or do trust your instinct and hope it will all work out?

It doesn’t matter whether you’re a large corporation or a small business – background checks are a necessity and may save you from embarrassment or litigation somewhere down the line. It is imperative that you protect your company by making this step a vital part of your hiring process.

(Even government entities miss the mark from the time to time. Anyone recall this 2013 story about the City of Dallas’ failure to properly vet its technology manager? That administrative error led to property theft, criminal charges, and unwanted negative publicity.)

But if you’re new to hiring for your own company or it’s been a while since you’ve had to replace anyone on your team, the notion of running background checks and peering into someone’s private life can be daunting. The Fair Credit Reporting Act (FCRA) regulates what you can and can’t do with the information you obtain, and some of the rules change from year to year. As you navigate your options, it may be prudent to consult with an HR firm or a business attorney before moving forward. (There are also non-compete forms, non-disclosure documents, and other paperwork you’ll want all your employees to sign before they start work. Seek expert advice for those items, too.)

Here are some things to consider when it comes to background checks:

  • Use a full-service background-check vendor if you can. Taking a DIY approach to this often leads to inaccurate or limited information. Your vendor should be accredited by the National Association of Professional Background Screeners; they’ll be current on the latest FCRA changes and make sure you have all the correct documentation for your files.
  • Make sure you’re looking at the right aspect of a potential employee’s background and work history. You might search motor vehicle records if you’re hiring a delivery driver, but that could be a waste of time and money for an in-house IT technician. A professional vendor will know which databases are the most appropriate for your company and the position.
  • Be careful with having employees sign too many forms. Paperwork can get out of hand quick right before and during the new-hire process. A recent federal court ruling regarding the use of liability waivers has many companies and vendors scrambling to update their policies. Again, unless you are intimately familiar with FCRA regulations, it’s best to have a vendor or lawyer take the lead on this.
  • You’re doing this to protect you, your other employees, and your business. Some may feel it’s invasive, but the adage “better safe than sorry” applies here. What if a new employee has lied about the level of training and education they have received and puts themselves, another employee, or your customers at risk? When it comes to the reputation of your business you need to be as sure as you can.

Of course, background checks can’t catch everything. They likely won’t tell you if the new employee is chronically late to work, or can’t follow verbal instructions, or is grumpy the day after a Dallas Cowboys’ loss. And there’s only so much of our private lives we want anyone to pry into, regardless of the work we’re doing. But it’s a necessity these days, and one more way you can protect yourself and your business in the years to come.

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ATTORNEY CHRIS PARVIN is Board Certified in Estate Planning & Probate Law by the Texas Board of Legal Specialization. Mr. Parvin is the Managing Partner of the Dallas, Texas law firm of Parvin Law Group, P.C. and serves as an Adjunct Professor of Law at Texas A&M University School of Law. Mr. Parvin can be reached by email at [email protected].

Parvin Law Group, P.C. is a Concierge Law Firm in Dallas, Texas with attorneys practicing law in the fields of Estate Planning, Probate, Business Law and Family Law.