Checking the Backgrounds of New Hires

An average of 178,000 employees per month were added to the payrolls of employers in the United States in 2016, according to an “Employment Situation Summary” released in December by the U.S. Bureau of Labor Statistics. And the pattern of a significant number of new hires per month is expected to continue into the New Year.

If your dealership plans to add employees in the foreseeable future, you’ll want to make sure you’re bringing in “good people” you can trust with sensitive customer information — and with your inventory. In this regard, one crucial step in the hiring process is the employee background check.

Laws on the books

Background checks need to be performed without violating privacy rights and other laws, which vary from state to state and evolve frequently. So, you’ll want to consult an attorney before beginning your hiring quest.

The Fair Credit Reporting Act, for instance, defines the standards for using credit checks in employment screenings. Before requesting a credit (or “consumer”) report, an employer must: 1) disclose clearly and conspicuously to the employee or applicant (in a separate document that doesn’t refer to other subjects) that a report may be requested, and 2) obtain the applicant’s or employee’s written consent.

In many states, only law enforcement agencies, financial institutions, debt collectors, insurance companies and sureties can check credit reports. The Electronic Communications Privacy Act does, however, permit credit history inquiries by other types of employers if they’re related to a “bona fide occupational requirement” of a particular position or group of employees. These limited exceptions exist for jobs that involve:

  • Access to personal, financial or confidential information; trade secrets; or national or state security information,
  • Unsupervised access to cash or certain assets valued at $2,500 or more,
  • Bonding or security required by state or federal law, and
  • Signatory power over business assets of $100 or more per transaction.

An exception also exists for managerial duties that involve setting the direction or control of the business.

Other rules to follow

The Driver’s Privacy Protection Act regulates how information from state motor vehicle department records can be released and shared. The departments generally will make the job candidate’s driving records available, usually for a small fee.

Most schools, colleges and universities, however, won’t release records without the student’s consent. Some schools will release records only to the student.

You also may need the candidate’s consent before performing a criminal background check. In general, it’s illegal to inquire about arrests — you can inquire only about convictions.

The right provider

An employer may personally conduct a background check. Free general advice for doing so is available from the Small Business Administration and other organizations. But often the more convenient approach is to hire an outside agency such as a background check specialist, private investigator or credit agency.

Additionally, be wary of Web-based companies that offer “instant” checks. There isn’t one national database that contains all federal and state convictions. Finding criminal records can be a fragmented task across multiple jurisdictions and courts. Moreover, many e-businesses offer low rates for public record searches, but the advertised rates may be deceiving. The more jurisdictions you want to search, the more you’re likely to pay.

Only part of the picture

Conducting background checks is only part of the due diligence process in hiring new employees for your dealership. But it’s a critical one that you’ve got to approach with the utmost care.