Survey Says More Companies Doing Background Checks on Job Candidates

Even as states and the EEOC are getting tougher — and talking tougher — on the use of credit checks, more employers are using them, says a just released survey of trends in background screening.

Of the 783 responses to the survey conducted in March by EmployeeScreenIQ, 21 percent of the respondents reported they credit check all their employees. Last year EmployeeScreenIQ found only 15 percent reported doing that.

Whether they check all or just some employees, more companies are checking. The survey found two-thirds of perform credit checks; that’s up from 61 percent last year.

4 states now limit credit histories in hiring

SHRM got similar numbers when it surveyed members in winter 2009. Some 40 percent said they credit-checked no one; 13 percent reported credit checking everyone.

It seems surprising that the number of companies performing universal credit checks is going up, even as the debate over whether they should even be allowed is intensifying.

At least four states — Hawaii, Illinois, Oregon, and Washington — now limit the use of credit histories in hiring. Massachusetts and Hawaii also prohibit asking about criminal records on initial applications.

Doing business outside those states is no safe harbor. The Equal Employment Opportunity Commission has turned up the heat on the use of credit histories, suing Kaplan Higher Education Corp. last December. The suit claims Kaplan denied jobs based on credit histories in such a way that it had a disparate impact on blacks.

The EEOC’s ultimate concern

That suit came not two months after the EEOC held hearings on the use of credit checks in hiring. In opening the hearing, EEOC chair Jacqueline Berrien set the purpose:

As the nation’s leading enforcer of federal laws prohibiting employment discrimination, the EEOC’s ultimate concern is whether these screening practices, devices or tools deny equal employment opportunity to any workers in the country and are keeping qualified and capable people from entering the workplace for unfair reasons.”

It’s no surprise that Nick Fishman, VP and co-founder of EmployeeScreenIQ, blogged a warning: “The EEOC is especially targeting ‘bright line’ hiring decisions that automatically exclude candidates with criminal records, arrest records that don’t result in a conviction, and/or poor credit.”

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Yet, just a few months later, the EmployeeScreenIQ survey — titled Trends in Employment Background Screening — found 8 percent of companies will outright reject a candidate based on adverse background information. In fairness, the report notes that it is possible all those companies are in regulated industries (transportation, for instance) where certain types of black marks are mandatory disqualifiers.

90% say qualifications are most important hiring factor

On the other hand, 92 percent of the respondents said they’d either give the candidate a chance to explain the situation, or would weigh other factors more heavily. Indeed, in another part of the survey, 90 percent of respondents weighed qualifications as most important or important in making a hiring decision. Next, was the interview with 75 percent rating it as important or most important.

The survey had some other interesting tidbits such as despite finding that 53 percent of employers use LinkedIn to source candidates, only 35 percent ever use it for background screening.

Of those who do use social networking and other online sources for backgrounding, most would knock out a candidate only if they discovered the person had lied about qualifications or made discriminatory remarks. But 50 percent would also eliminate a candidate based on the kind of pictures that were posted or details about drinking or drug use.

Those latter two in particular could get you in trouble. As the report points out:

Unfortunately employers who make such judgment calls based on social networking results may legitimately fall into the crosshairs of the EEOC and other regulatory agencies. Employers are encouraged to create a corporate social networking policy that prohibits the use of protected class information found on such sites, and that calls for validating negative information before taking action.”

John Zappe is the editor of and a contributing editor of John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.


1 Comment on “Survey Says More Companies Doing Background Checks on Job Candidates

  1. We are very proud of this years survey.  I think the most important highlights are:

    -Respondents are less concerned about EEOC
    inquiries and government interference in the background screening
    process than they are about a provider’s ability to deliver results and
    candidates with criminal records. -Respondents cited qualifications and interviews as the leading
    influencers when making hiring decisions, ranking candidates’ criminal
    records third in importance. -66 percent of respondents never check social networking sites such
    as Facebook, LinkedIn, and others for the purposes of conducting
    background check. -92 percent of employers will reach out to candidates or consider
    job relevance when a background check reveals adverse information. Only
    8% of respondents reject a candidate outright. -21percent conduct credit checks on all employees while 33% don’t perform them at all.

    While the results do show a small rise in companies using credit reports, this can also be attributed to a rise in hiring in sectors that require it by law.  For instance, the financial services industry has been rebounding nicely, they are required to run these types of searches. 

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