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The Importance of Pre-Employment Background Checks

Pre-employment-Background-Checks

Jun 26, 2025

Submitted by:
Stephen Rossi, Paychex
szrossi@paychex.com
(973) 652-3625

Pre-employment background checks were once considered a luxury among small business owners, but in today's competitive hiring landscape, they can be a vital part of the hiring process. Background checks help protect employers by allowing them to confirm applicant credentials and skills before they’re hired.

To maintain excellent hiring practices and increase your chances of hiring the right talent the first time, consider these best practices for incorporating pre-employment background checks into your hiring process.

What's Included in a Pre-Employment Background Check?

A comprehensive pre-employment background check can go a long way in providing insight into a potential hire. During this process, the employer or a designated research company may investigate multiple aspects of a potential hire's background, including:

  • Identity Verification: Confirms the candidate’s name, age, and Social Security information to ensure they are who they claim to be.
  • Criminal History: If permitted under applicable law, alerts employers to any court records or criminal activity, where legally allowed, to assess potential risks.
  • Employment History: Compares past employment records with the candidate's application to verify their experience.
  • Credit Reports and Financial Information: Relevant for roles involving finances, such as executives, where credit checks may be appropriate under legal guidelines.
  • Education Background: Verifies academic credentials, which may be especially critical in industries like insurance or education.
  • Motor Vehicle Records: Reviews driving history for roles requiring company vehicle use to ensure safety and protect assets.
A new hire discusses benefit enrollment with his manager

Why Are Pre-Employment Background Checks Important?

Pre-employment background checks can be a quick and easy step that employers can take to improve the chances of making a great hire the first time. It's also a tool that employers can use to gather concrete, quantitative data on an applicant during the hiring process. When employers invest in this process, the background checks can help employers to:

  • Avoid hiring the wrong candidate as they can be a drain on valuable company resources. Having to repeat the recruiting and hiring process can add considerable expenses to a company's bottom line so make the right hiring decision the first time.
  • Ensure workplace safety as employers have a responsibility to protect the safety and well-being of all their workers. Background checks can help identify candidates with a previous history of unsafe behavior before they’re hired.
  • Reduce liability and legal costs associated with employee theft, property damage, and lawsuits that can end up costing companies billions of dollars each year.
  • Verify a candidate's qualifications and reduce the risk of fines or legal action due to candidates working without the proper credentials.

Laws Surrounding Background Checks

Various government agencies have set guidelines on how background checks can be used when hiring or terminating employees. Often, local, state, or federal laws may limit the information employers can gather before making a job offer or use as part of their employment decisions.

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act, along with similar state laws, gives individuals the opportunity to challenge and correct inaccurate, incomplete, or false information in background checks. Since these checks can influence job offers, housing and credit applications, and other important areas of life, the FCRA provides essential protections and potential recourse, ensuring individuals have a way to verify the accuracy of the information and take action if needed. Employers must comply with these various notice requirements under the FCRA and applicable state laws when conducting background checks.

Equal Employment Opportunity Commission (EEOC)

The Equal Employment Opportunity Commission offers crucial guidance to employers on responsibly using background check information when making hiring decisions. The EEOC specifically prohibits discrimination based on race, gender, age, skin color, disability status, and other protected factors during the hiring process. The EEOC also provides clear examples of unacceptable practices, such as asking discriminatory interview questions, to ensure fair and equitable treatment for all candidates. Alongside EEOC regulations, employers must also follow federal FCRA guidelines, as well as any applicable state or local laws, when conducting background checks or making hiring decisions.

Ensure every hire is the right one with Paychex Employee Screening Services.

The Process of Running Pre-Employment Background Checks

When conducting a background check, you may need to gather information from multiple sources to obtain your candidate's information. To ensure your process complies with all applicable federal and state guidelines while also providing the needed information in a timely manner, you should take the following steps:

  1. Create a policy: Include necessary paperwork such as a disclosure, release form, or a summary of rights.
  2. Get legal advice: Speak with an expert in pre-employment screening to identify necessary steps in your hiring process or best practices for handling negative findings.
  3. Use an FCRA-compliant background check service: Although there are multiple ways to obtain background information, make sure you opt for a background check service that adheres to FCRA and state regulations.
  4. Research Obligations: Be sure to research your obligations under the FCRA and applicable state laws to help avoid unnecessary penalties or legal risks.
  5. Notify applicants: Obtain written consent from applicants to perform a background check, ensuring the form meets FCRA standards. You should inform applicants if a job offer is contingent on a pre-employment background check.
  6. Make a contingent job offer: Inform candidates that their job offer is pending background check results to set clear expectations. By making the offer contingent on the results of the background check, you’re also protecting your company should you discover information that would change your hiring decision.
  7. Review the findings: Background check reports can be several pages long. Carefully examine the background check report for any concerns and consult with an HR professional or legal counsel if needed.
  8. Follow up on results: If withdrawing a job offer, you are required to provide a pre-adverse action letter and a copy of the report to the applicant. Allow them to respond before finalizing, and you may want to consult legal counsel to help you with your compliance.
  9. Recordkeeping: In compliance with the Fair and Accurate Credit Transaction Act, background check paperwork must be properly safeguarded to protect individuals' personally identifiable information (PII). Consider saving detailed records of applicant interactions while maintaining confidentiality, and consult legal counsel for guidance.

The Value of Pre-Employment Background Checks

It can be challenging to capture the full range of information needed to successfully complete a pre-employment background check. Many companies choose to work with an employment screening resources (ESR) provider to conduct screening tasks such as tracing Social Security Numbers, verifying identity and employment eligibility through E-Verify, conducting criminal and financial background checks, accessing civil and driving records, and conducting drug testing and industry-specific background checks.

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