Stanford University

The Purpose of Background Checks

Over 90% of companies run some type of background check on their job applicants.  Pre-employment screening can be expensive and time-consuming, but most companies feel it is an essential part of the hiring process.

Here are the top five reasons why a company will take a good look at you before making a hiring decision:

1. Fraud – It’s estimated that over half of all job applicants lie on their resumes and job applications each year.  Education leads the list, with over half a million people in the U.S. falsely claiming to have college degrees.   Many people enhance their job titles, stretch dates to cover employment gaps and even invent employers.  By running a complete background check, a company can quickly verify if an applicant is telling the truth.

Veritas asked CFO Kenneth Lonchar to resign following the discovery that his claim to an MBA from Stanford University was phony.  George O’Leary, hired as Notre Dame’s head football coach, lost his job when it was revealed that his resume contained falsehoods.  

2. Criminal Activity – No company wants to hire an individual who will bring crime into the workplace.  Some two million Americans are victims of workplace violence every year.  Many companies face theft, embezzlement and drug use by employees on a regular basis.  In addition, the terrorist attacks of 9/11 have caused many employers to take a more careful look at their hires.  

A complete background check will usually let a company know if an applicant has a criminal record.  Not all people with criminal records are hiring risks, but pre-employment screening allows the employer to make an informed hiring decision.

3. Negligent Hiring Lawsuits – A company can be held responsible for the actions of it’s employees if it fails to conduct a background check prior to hiring someone.  Lawsuits for negligent hiring are one of the fastest growing areas of litigation.  Industry experts say that employers lose almost 80% of these cases.

Seeking to protect themselves from multimillion dollar jury verdicts and enormous legal fees, companies are now very cautious about who them hire.  They know that one bad hiring decision can dramatically hurt a company’s finances and reputation.

4.  Recruitment Expense – Finding qualified applicants for a job costs time and money.  Managers who are looking for new employees must spend their valuable time developing and placing ads, sorting through resumes and interviewing applicants.  After a long recruiting process, a company wants to be sure that they have selected the right applicant.  They don’t want to repeat the process all over again.

5.  Federal & State Laws – Background checks are required for many state and federal jobs.  For example, most states must run a criminal background check on anyone who works with the elderly, the disabled or with children.  Many federal jobs require an extensive investigation for those trying to get a security clearance.

Whatever the reason, the chances are excellent that a hiring company will want to look into your past.  The best thing you can do is to be prepared when it happens.

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