Not all background checks are created equal. Nor are the regulations concerning them.
Depending upon whether you’re checking on a potential employee or a possible business partner, for instance, the questions you can legally ask vary. So does the information that your background check partner can provide.
And, of course, your liability can vary wildly.
Here’s how to protect yourself and avoid problems.
Two Critical Factors
First, understand what you want to know before you begin. Ask yourself:
- What is the critical information I need to get from this background check?
- What would be nice to know, but I can live without it?
- What do I not need to know?
Background checks can be quick and inexpensive, or very involved and costly. As you can guess, the more you want to know, the more you’ll probably have to pay.
Second, keep in mind that you must have a permissible purpose to conduct a background check, such as a hiring decision, business transaction or litigation support. You can Google an old classmate to see how he’s doing. Doing a full-blown background check on someone just because you’re curious can get you into trouble.
Know the Laws
The Fair Credit Reporting Act (FCRA) is the federal law that governs employment background checks. This is true even if the background check doesn’t include a credit check (despite the name). We’ll delve into the FCRA in other blog posts, but key points include making certain certifications and collecting specific documents before conducting the check.
In addition, you should also be aware of state and local laws. For example, in New York City, it is illegal to ask an applicant about their criminal record history before making a conditional employment offer.
Where Info Comes From
To start a background check, you’ll need to provide basic facts about the individual, such as personally identifiable information (PII): full name, date of birth, Social Security number, and other names used. If that information isn’t available, the firm you use to conduct the background check will attempt to fill in the blanks.
Your background check provider will use this information to determine the subject’s address history, which can include residences, employment, investment properties, etc. Not surprisingly, this information comes from various sources. Research documents may include credit headers, voter registrations, property records, motor vehicle records, utilities and more.
Once you have the address history, the next decision is to decide how far back you need to go in searching for records. Time quite literally means money in this case. Do you care about a bankruptcy that occurred 10 years ago? Assault charges that are 20 years old? Again, what are your goals? You probably want to know if a potential M&A (mergers and acquisitions) partner has ever declared bankruptcy. You’re probably less interested that a new hire was convicted of a traffic violation 13 years ago.
For the most reliable information, searches are conducted with primary sources. This can include a visit to the courthouse for a thorough search of case filings, or to the clerk’s/recorder’s office to search for judgments, liens and property records. Searches for motor vehicle records would be conducted with the applicable Department of Motor Vehicles. To round out the research and to capture information that may not be in the person’s address history, database searches may be conducted for criminal, civil, property records, etc. Media, social networking and Internet research can also identify information that may not come up in certain “boots on the ground” inquiries.
Questions to Ask Any Provider
If you’re new to the background check process or simply want to confirm that you’re getting what you need, ask a prospective investigative partner these key questions:
- How do you develop address history/confirm PII?
- How far back do you search in a subject’s address history? How far back do you search court and recorder’s office records?
- Are court searches conducted in-person (or in-person equivalent)? Note that while some courts offer online searches, they are not the same as having someone go to the court to use their systems.
- Which searches are done via database (typically a secondary source of information)? How often is the information for those searches updated?
If you have any questions about this article, please call our office at 212.871.1274 or post it below in the comments.
