Background checks 101: what small businesses need to know

Running your first background check means untangling a few things fast: what to check, what the law requires, what your provider actually does, and what happens if a report comes back with something on it.

The process is more straightforward than it may seem, and a background check provider like Checkr handles much of the screening itself. Your job is to follow the required steps, use the results appropriately, and pick screenings that actually match the role—more on that here.

This guide covers how employment background checks work from start to finish, including what’s typically checked, what the law requires, and who’s responsible for what before you run your first check.

A background check can include several different types of screening. The goal is to select screening that’s relevant to the job.

Identity-related checks verify that the candidate is who they say they are. Depending on the screening, this may include a candidate’s name, address history, or Social Security number.

These checks matter most when a candidate will have access to homes, vehicles, money, or vulnerable people. They’re also useful when accurate identity information matters for the searches being conducted, including when hiring remote workers, gig workers, or contractors you may not meet face to face.

Criminal background checks search available records for information about a candidate’s criminal history. Depending on the screening package and jurisdictions involved, searches may include county, state, and national databases, or other public records. Consider the information that is returned in relation to the specific position, and apply hiring criteria consistently.

Education verification confirms degrees, schools attended, and graduation dates, while employment verification confirms information like previous employers, job titles, and dates of employment. Run these checks when the role requires specific qualifications or experience.

A motor vehicle record, or MVR, check looks at a candidate’s driving history. Depending on the jurisdiction, an MVR may show license status, restrictions, and certain driving violations. It’s most relevant for delivery, transportation, field service, or other roles where employees operate vehicles.

The background check process involves three main parties, each with a different role.

Employers decide whether screening is appropriate for the position, select the checks to run, start the screening process, and use the results in their hiring decision. They’re also responsible for consistently following any applicable laws.

This is the background check provider. Consumer reporting agency (CRA) is the term used by the Fair Credit Reporting Act (FCRA) for companies that compile or evaluate consumer information for the purpose of providing consumer reports. When a CRA provides a consumer report for an employment decision, both the CRA and the employer have responsibilities under the FCRA. When you order an employment background check through Checkr, Checkr acts as the CRA.

Candidates provide the information and authorization needed to conduct the screening. They also have rights under the FCRA when a consumer report is used for employment purposes, including rights related to the report’s accuracy and certain actions taken based on its contents.

Understanding these roles makes it easier to know where responsibilities fall. The provider handles screening and processes disputes about the report’s accuracy or completeness, while the employer remains responsible for the employment decision and its hiring criteria.

The exact workflow can vary by provider and screening package, but the basic background check 101 process follows a predictable sequence.

Start with the job. Consider the responsibilities, qualifications, licenses, driving requirements, and other factors that make a particular type of screening relevant.

When an employer obtains a consumer report from a third-party screening company for employment purposes, the FCRA requires certain steps first. The employer must provide the candidate with a written disclosure (as a standalone document) that the employer may obtain a consumer report for employment purposes. The employer must also obtain the candidate’s written authorization before requesting the report.

Once the employer has the required authorization, it submits the screening request. Depending on the provider and screening process, the candidate may then provide identifying information or other details needed to conduct the searches ordered.

The provider conducts the requested searches and compiles the results into a report. Different searches take different amounts of time, so overall turnaround time depends on the screening package and how quickly the provider obtains the required information.

The employer reviews the report using the criteria established for the role. When information requires additional review, consider it in context, including the nature of the record, how much time has passed, and its relevance to the position’s responsibilities.

Apply your screening and decision-making criteria consistently to candidates for the same role, while accounting for any individualized assessment or other requirements that may apply under federal, state, or local law.

If an employer is considering an adverse employment action based on what’s in the report, additional FCRA requirements apply. At a high level, the process includes providing certain information to the candidate before taking final adverse action, and providing required notices if the employer ultimately takes the adverse action.

Once the appropriate screening and decision-making steps are complete, the employer can move forward with the hiring decision. Maintain documentation of the screening and decision-making process in accordance with applicable record-retention requirements and your organization’s data retention and security policies.

The FCRA is a federal law that regulates consumer reports, including reports used for employment purposes. When a business uses a third-party company to obtain a consumer report for hiring, the FCRA establishes responsibilities for both the employer and the consumer reporting agency, as well as protections for the candidate.

The employer still has responsibilities for how it discloses screening, obtains authorization, uses report information, and handles adverse employment decisions.

Other federal, state, and local laws may add requirements or restrictions, including rules governing when employers can conduct background checks and what information they can consider.

Small businesses running their first background check commonly have questions about who handles what, how long it takes, and what to do when something turns up. Here are the questions that come up most frequently.

You can search some public records yourself, but doing so means taking responsibility for finding the appropriate records, determining whether the information belongs to your candidate, and understanding whether and how you can legally use it.

Using a screening provider can simplify that process by conducting the requested searches, matching records to the candidate, and providing a process for candidates to dispute information they believe is inaccurate or incomplete.

Employers may conduct background checks on existing employees, but they must still follow applicable requirements. Depending on the circumstances and the authorization originally obtained, you may need additional disclosure or authorization. State and local laws or workplace policies may also affect when you may conduct ongoing or periodic screening.

If you’re introducing screening for existing employees or taking action based on the results, consider consulting qualified legal counsel about the requirements that apply to your situation.

If a written authorization is required and the candidate does not provide it, you cannot obtain the employment background check through a CRA.

How an employer responds may depend on the role, the employer’s screening policy, and applicable law. The situation can be more complicated with an existing employee, so employers should consider relevant requirements and seek legal guidance when necessary, rather than treating a refusal the same as an unfavorable background check result.

The length of a background check depends on the information you’re requesting. There isn’t one standard timeline. Some searches can be completed quickly, while others that depend on courts, government records, previous employers, educational institutions, or other sources can take longer.

The screening package you choose also affects the timeline. A simple criminal history search won’t necessarily take as long as a package that includes employment or education verification.

There isn’t one universal lookback period for every background check. How far back a report can go depends on factors such as the type of information being reported, applicable federal, state, and local laws, and the jurisdiction where the candidate will work.

Some laws restrict how certain records can be reported or considered, while other types of information may be available for longer periods. A background check provider can help apply applicable reporting restrictions when preparing the report.

A record on a background check isn’t automatically a reason to reject a candidate. Consider the information in relation to the job, apply your established decision-making criteria, and follow any federal, state, and local requirements. If the report may lead to an adverse employment decision, follow the required adverse action process before making the final decision.

Running your first background check as a small business becomes much easier to manage once you understand the basic sequence: decide what screening the role requires, get the appropriate authorization, let your provider conduct the searches, review the results, and follow the required process before making a decision.

From there, you can turn those steps into a repeatable process for future hires. Start with role-relevant screening, set clear criteria for reviewing results, and make sure everyone involved understands the path from authorization to the final hiring decision.

About the author

Hayley Harrison began her career as a hiring manager at a mid-size regional bank in the Pittsburgh area. She now brings her experience and knowledge of hiring best practices to her work as a freelancer, helping employers refine and improve their processes.