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8 Essential Steps of a Background Investigation

Background checks reduce the risk of hiring someone with an undisclosed history of violent crime, substance abuse or other issue, keeping the workplace safer.

Posted by Katie Yahnke on August 20th, 2019

Some companies skip background investigations because they can be costly and time-consuming. Plus, there are restrictions on what information you can and cannot use in the hiring decision. You could reject a candidate but then face a lawsuit for unlawfully obtaining the information used in the decision.

Despite all of this, the benefits of a background investigation outweigh the time and effort put into one. A well-conducted background investigation reduces the odds of hiring someone who is dishonest, immoral or dangerous.

This article highlights the many benefits of background checks and eight areas to never miss while conducting a background investigation.

If you have many investigations on the go, case management software keeps it organized. Check out the Buyer’s Guide to learn how it works and if it’s right for you.



First, Why Conduct a Background Investigation?

Workplace violence, employee theft and legal obligations have made background investigations a common practice. Here are three reasons why an employer should conduct a background investigation for every single employee they plan to hire.


It’s Easier to Not Hire than to Fire

First, conducting a thorough screening reduces the odds that there will be an unfortunate surprise after the applicant is hired. If a background investigation reveals that one of the applicants has a criminal record of physical violence, the company can hire someone else. But, if no check was done and this new hire is showing warning signs, it may be difficult to terminate their employment legally.


A Bad Pick Can Cost a Lot

Second, a poor hire can cost a lot of money and time, while also causing significant reputation damage. One-quarter of businesses surveyed by Fast Company estimated that a bad hire cost them at least $50,000 in the past year. The figure includes time spent recruiting and training, as well as the negative impact on employee morale and productivity.


It Helps Companies Be Compliant

Lastly, employers have a legal duty to maintain a safe place for employees and customers and background investigations help them do this. A study by Kellogg and Northwestern University’s Pritzker School found that someone with a criminal past can create a highly volatile atmosphere in the office and is more likely to be fired for misconduct. Background checks reduce the risk of hiring someone with a history of violent crime or substance abuse, therefore keeping the workplace safe.


In-House vs. Third-Party Company

A background investigation is one task where it’s better to spend money and know the job has been done right than to try to do it yourself. The laws surrounding background investigations are complex, and getting the necessary information requires expertise, so it’s generally advised to hire a specialized third-party to take on this task.

While thousands of these businesses have sprung up, offering anything from a routine record check to an in-depth investigation for a relatively low cost, it’s important to hire a reputable company or investigator. Another perk of hiring a third-party for the job is that they are covered by the Fair Credit Reporting Act (FCRA). This federal law regulates the collection and retrieval of consumer credit reports, shaping what employers can and cannot access.

However, whether the background investigation is conducted by an in-house investigator or a third-party company, these are the steps to take:

Confirm the Applicant is Qualified

The first step is to verify that the applicant is fit for the job through experience, education and other job-related qualifications.


1. Verify Their Employment

Top Resume asked recruiters and hiring managers to send in their best (or worst) experiences with lying applicants. In one story, a candidate lied about being employed at a company where the recruiter was employed at the time. The recruiter asked the candidate about his duties and coworkers, and it turned out he was using a family member’s stories to beef up his resume.

Coincidences like these are rare. Most of the time, a lying candidate won’t be caught until the background investigator verifies their previous employment experience. It’s important to verify a candidate’s previous job positions, dates of employment, wages and rehire eligibility. For many industries, on-the-job experience is more important than a degree, and to lie about experience can be potentially fatal.


2. Verify Their Education

According to Neeyamo, one in six candidates misrepresents education or employment records. New technology and online businesses make it easy to create a fake diploma or other certification.

The background investigator should get in touch with the candidate’s school to confirm that they attended the institution, completed the program and obtained the degree. If they claim other achievements, such as graduating with distinction, the investigator should ask about them as well.

A candidate claiming to have degrees they never earned might seem minor, but it can cause true harm to a business. For example, imagine learning your family doctor never attended medical school. Or, consider Marilee Jones, the Dean of Admissions at Massachusetts Institute of Technology. Jones resigned from her position in 2007 after admitting she’d been lying about her academic degrees for nearly three decades.


3. Confirm Their Other Job-Related Qualifications

For some industries, there are other job-related qualifications that the applicant must possess beyond education and experience. It’s common in the trades and healthcare industry for professionals to hold licenses or certificates.

For example, if you are the hiring manager for a busy emergency pet hospital, the investigator should check that the potential new hire is in good standing with the American Veterinary Medical Association. Having this certification shows that the candidate is registered, fit to practice and does not have any open investigations against them.

Watch our free webinar, Can I Use That?, to learn how to effectively and legally screen a candidate’s social media accounts.

Also, by verifying the candidate’s job-related qualifications, a company is protecting itself against a negligent hiring lawsuit. According to Greenhouse, negligent hiring is a legal term describing “an employer’s liability for an incident caused by an employee when the employer knew (or should’ve known) that the employee posed a risk”. If the new hire causes harm to a customer or patient, but there were red flags an employer should’ve seen, the company may be on the hook for the damage caused.

For many years the Department of Veterans Affairs was illegally hiring doctors and other health care professionals with revoked licenses. One VA employee, a neurosurgeon, had a number of malpractice claims and settlements against him. Ultimately, the surgeon’s license was revoked when a patient died in his care. This is only one of many instances of negligent hiring for VA.

Confirm the Applicant is Telling the Truth

The next step is to verify that the applicant is telling the truth on their resume, cover letter and applicant questionnaire. The best way to do that is to reach out to those who know them.


4. Follow Up with References

The background investigator is not usually responsible for following up with the applicant’s references. The recruiter, hiring manager or another HR professional usually takes on this task. Regardless, the goal is to communicate with a reference who can either confirm or deny what the applicant is claiming to be true.

There are many instances where speaking with a reference, whether it’s a recent supervisor or acquaintance, exposes critical information. The reference may be able to line-up dates and figure out work history gaps. Perhaps the reference will expose that the candidate’s departure from their last job was not voluntary.

Speaking with references is also a great opportunity to ask open-ended questions. Move past yes or no questions and ask about the applicant’s work ethic, loyalty and morals. Donna Svei, founder of executive resume writing service Avid Careerist, recommends asking: “On a scale of 1 to 10, with 1 being ‘problematic’ and 10 being ‘no concerns’, how would you rate the candidate’s ethics?”. If the response is anything other than 10, Svei says, ask about the gap. How they answer this will reveal a lot.

Confirm the Applicant is a Safe Bet

Criminal record, driving and credit checks hold a lot of valuable information. Don’t forget to pull these (in compliance with laws) to see if there are any concerning secrets hidden inside.


5. Conduct a Criminal Record Check

Conducting a criminal record check is one of the most common steps in a background investigation. A survey from 2010 found that only 10 per cent of employers do not check criminal records in their hiring process.

It’s important to know if a potential hire has ever been convicted or pleaded no contest to a crime. And, more importantly, what kind of crime was it? A misdemeanor or a felony? What was the nature of the crime? When did the crime occur? Was this a first offense or one of many? While there is a lot of valuable information here, the use of criminal record checks may negatively impact diversity applications.

Find this article too late? Already hired someone severely underqualified? This Termination Letter Template will help you write a fair termination notice.

Fortunately, the Equal Employment Opportunity Commission developed a guidance document titled “Consideration of Arrest and Conviction Records in Employment Decisions”. Section VIII, Employer Best Practices, is particularly insightful for employers who are considering criminal record information when making employment decisions.

Employers should also check with their state and local laws concerning criminal record checks.


6. Conduct a Credit Check

While a criminal record check can reveal whether or not an applicant has been in trouble with the law, a consumer report can show some undesirable traits. The record tracks debts they’ve incurred, including mortgages and student loans, and the payment history of those debts. A person’s financial situation could shine a light on whether they are irresponsible, disorganized or a risk.

For example, imagine the hiring manager of an accounting firm requests a consumer report for a potential new hire. They notice that the individual has significant debt and has been struggling financially for decades. This person should not be teaching others how to be savvy with money.

The FCRA strictly regulates the use of credit checks in hiring. First, it’s illegal for an employer to conduct a credit check without notifying the candidate and receiving explicit, written consent. Second, the employer must notify the candidate if the report is the reason they were not hired. Third, the candidate has a right to explain red flags or request that incorrect information be fixed.


7. Conduct a Motor Vehicle Record Check

A motor vehicle record (MVR), similar to the consumer report, reveals certain traits of the applicant. An MVR will show whether they engage in risky behavior such as excessive speed, or illegal acts such as driving under the influence of alcohol or drugs.

MVRs are crucial for jobs where the individual will be driving, such as a subway operator, a trucker or a ride-hailing app driver. If the individual will drive for any part of the job, however, it’s best to look at their driving record. The company may face a negligent hiring lawsuit should they be involved in an accident causing harm.

Confirm Other (Unique) Details

8. Additional Questions for Special Background Investigations

Depending on the job or the company, there may be additional steps in the background investigation process. Federal government agencies that handle confidential information often require secret and top secret clearances. To obtain a security clearance, the investigator may also need to:

  • Interview neighbors
  • Interview close associates
  • Inquire about substance use
  • Analyze mental illnesses and treatment
  • Question overseas travel
  • Investigate residential history
  • And more


Solid online research skills can make your investigations more thorough and efficient. Watch this free webinar to learn helpful techniques and tools for gathering information you need online.

Just like no interview is the same, no background investigation is the same. Follow these eight steps and tailor them to your unique situation to conduct a thorough, informative and revealing investigation every time.

Katie Yahnke
Katie Yahnke

Marketing Writer

Katie is a former marketing writer at i-Sight. She writes on topics that range from fraud, corporate security and workplace investigations to corporate culture, ethics and compliance.

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