- 1 JobUnlocker
- 2 HR Basics: How Long Does a Background Check Really Take?
- 3 Who Are You Dealing With? Client Background Check Essentials
When considering an applicant for employment, employers must be cautious as to who they hire. Cautious not only with regards for the safety of the personnel within the company, but one must prove to be a potential beneficial asset. To obtain the appropriate information and assist in making the best decision for the company, employers conduct background checks for each qualified applicant.
This includes: credit rating, criminal records, work history, and driving record. Each person normally posses’ basic ethical attributes such as honesty and integrity. Background checks ensure and prove one’s ethical level based on his or her responses on an application. All checks are performed to ensure the best fit for the job is attained. Companies also try to avoid any legal liabilities or incidences if it can be prevented beforehand. All information, no matter how minuscule it might be is weighed equally. The employer must seek the most appropriate applicant to better further his or her company with the least amount of resistance.
Depending on the company and the sought position, some level of security clearance or sensitive information might require the background check. These agencies will use their own governmental databases that the public doesn’t usually have access to. These background checks are done by governmental agencies for small fee. For regular background checks, a private company may be hired by the employer to conduct the checks. The pricing depends on the company selected. Within the recent years a lot of legwork has been lifted from these checks by visiting each local department to conducting check through online companies.
In efforts to save time and man power, most companies use a form of computer databases to conduct searches. An all-in-one information packet is more cost beneficial. Here are some of the most widely used online companies and coinciding pricing information:
US Search- $39.95-$295.95
Background Searcher- $19.95
Gov. Registry- $39.95
3. What information is searched, and where is it found?
All information searched is publicly available within the bounds of state and federal laws. Personal identifying information is collected through the appropriate state’s vital records: birth certificates, marriage and divorce records. Driving records are obtained through the state’s department of transportation. Criminal checks are obtained through court records such as arrest records and lawsuits. Credit reports are obtained through three credit agencies: Experian, Equifax, and Transunion. Work history is searched through manual follow-up by an active employee by contacting an applicant’s listed previous employers.
Essentially as long as the background checks are done online, the information is usually readily available within minutes.
If there is any follow up needed or actual legwork to be done such as contacting previous employers and references, this process can take up to a week.
5. How is this information used to determine an applicant’s fit for a position beyond qualifications, and why?
When considering a qualified applicant for employment, all found information comes into play. When conducting identification checks, an employer looks for citizenship or legal residency, as well as to make sure there isn’t any form of identity theft.
Depending on the position sought, one’s driving record may carry a significant weight. For example: If an applicant is applying for a courier position, a driving record free of accidents, moving violations, and DWI’s may be more apt to securing the driving position than an applicant with said violations are on one’s record.
Credit history shows an applicant’s level of financial responsibility. One’s level of responsibility most likely does not shift from of aspect to the nest. For instance: If a person’s financial responsibility is low and is reelected by a poor credit score, one might not be a responsible or prompt employee. Lack of effort and care may be and all-around issue. Also when applying to financial institutions, they must eliminate the risk of a financially desperate employee to eliminate any possible internal frauds and embezzlement.
Criminal records hold a substantial weight. Employers are going to avoid trouble makers. A history of family violence and assault shows an employer that the applicant cannot get along with other people, and does not handle pressure or differences gracefully. Most companies have a zero tolerance policy.
Work history is weighed and can tell an employer about the applicant’s work ethic. The length of time one holds a job, reasons for laps in work history, and reasons for leaving the previous workplaces. In order to hire serious employees and keep a low turnover rate, employers will take this information into regards.
HR Basics: How Long Does a Background Check Really Take?
Conducting background checks on a perspective employee is a crucial part of any hiring process.
Employment screening can take anywhere from one to five days in most cases. This often depends on the type of background check an employer is running and myriad other circumstances.
While many employers want the quickest possible turnaround, it is more important to be both thorough and accurate. This helps to mitigate risk at a later date and ensures that employees will reflect the value of the company.
There are multiple aspects to a pre-employment screening. Depending on the organization, industry and job responsibilities, checks can include elements such as a criminal background check, reference checks, employment verification, education verification, driving record, drug testing and, or social media research. All of these aspects are important, and all can take time.
The best method for conducting criminal background checks is to research any county court/s where an individual has resided over the course of their adult life. There are about 3,000 counties in the United States, and unfortunately there is no reliable centralized database of criminal records.
One bottleneck that can occur is when a court mandates that the research must be conducted by one of their own clerks. In some cases, this can take a week or more and there is no reliable alternative. Other delays can occur when a record is found.
If your background screening company is doing their job properly, they will use methods to ensure the record they are reporting belongs to the person your are screening, is accurate and up to date and is legally reportable.
When it comes to resume verifications, results can take anywhere from one to three days. However, delays can occur if a past employer doesn’t respond to a request in a timely matter. It is also not uncommon for delays when verifying high school education during summer months or holidays when the schools are not appropriately staffed to respond to such requests.
It is important to remember that even those who have nothing to hide get a bit anxious about this process, especially when delays occur, so it is important to be transparent. Remember, these are people you actually want to hire. It is in your best interest to make sure that they have a positive candidate experience.
Let them what you are looking for and the types of information that might concern you. Let them know that you have a process in place to ensure that the information you use is accurate and up to date. And, let know how long it generally takes to complete the process.
It is also worth noting that you can and should expect assistance from your background screening company. They should be communicating delays to you in a timely matter, letting you know the nature of the delay and when you can expect to see the results.
If you suspect the delays are due to your provider, ask for complete logs which detail a timeline of all actions taken to complete the search.
There is one other thing that employers should keep in mind as they run a background check on a perspective employee. If there is something in the criminal background check or the credit check that prevents a perspective employee from receiving a job offer, the employer is legally obligated to notify them. The job seeker is then offered the opportunity to dispute it.
As mentioned above, reference checks, employment verification, education verification and social media can all also take time. It can also be difficult to get the job seekers’ references on the phone.
Background checks can be a cumbersome undertaking for any employer. That is why when they are done right and done thoroughly, they take time.
They are, however, an essential part to any hiring process.
Who Are You Dealing With? Client Background Check Essentials
Every client relationship your company creates is incredibly valuable — each has the potential to grow into a long-lasting revenue source.
However, client relationships take considerable time, energy, patience, and effort before they can become a trusted and reliable part of your business. It’s a big investment, and when a relationship fails you’ve usually lost quite a bit of time and effort along the way. In this article, we’ll look at several techniques you can use to screen out potentially negative clients such as non-payers, highly litigant clients, clients that are on the brink of bankruptcy, and plain old nightmare clients.
The best way to establish a basic level of protection is to perform basic client screening prior to allocating your precious time and resources to their project. So many Web developers believe that once the contract is signed, they are protected from most problems because the courts will happily force the client to make good on the contract. While this is true in some circumstances, even a small dispute can turn into a years-long nightmare in the court system, with you racking up legal fees every step of the way. Having a binding contract doesn’t protect you from an expensive and lengthy process of collections and legal proceedings.
With a little research, however, a surprising amount of these potentially problematic clients can be identified before you expose yourself to any risk. A few simple searches on the Web will provide you with the information you need to make good decisions and handle the potential client appropriately — and most of these information sites are free.
When Should you do a Background Check on a New Client?
Performing background checks on potential clients can take time, so you’ll want to be strategic in your approach. Each situation is different but, as a general rule, you’ll want to research the client more thoroughly as you invest more time and resources into that client.
If I’m asked for a proposal by a client that appears to be entirely legit, I’ll usually just peruse their Website, and get a feel for their personalities over the phone, before moving forward with the proposal. If the proposal itself is going to take 12 hours because the job is a large one, I might poke around a bit online and perform minimal research before investing the time in preparing the proposal.
Once a deal is in place (i.e. a contract is on the table or a verbal agreement, at least, has been made) I’ll usually verify the identity of the company with the corresponding state government, and check a few other free resources (which we’ll discuss in a moment) just to make sure there aren’t any warning signs.
Once the agreement is signed, however, it’s time to do a comprehensive check on the company and make sure that the contract is going to be enforceable and collectable. My goal is to make sure that the client is who they say they are, confirm that the signatory is authorized to sign on behalf of the company, and verify that the company is legal and doing real business. With those three items in place, we can comfortably begin the project knowing that we are, in fact, legally protected by the contract or legal agreement.
Now that you’ve decided to verify some information about your client, let’s take a look at the details you’ll be seeking, and where to find them.
Note: The following information is directly relevant to US legal and corporate standards, and may not apply to your location. Although the basic premise of qualifying and confirming client information is always important, local laws and resources may vary.
You’d be surprised how often I receive a signed contract from a new client, only to find that the contract is completely unenforceable. Why? It’s usually due to one of these reasons:
- The official name of the company does not exist in the corporate records of the state or region in which the contract needs to be enforceable.
Keep in mind that an incorporated business entity (in the US, a corporation or LLC, but elsewhere, the company could be called a Pty. Ltd., etc.) is an individual entity, separate from any person or group of people. The company must be registered with the Secretary of State in the state in which they’re doing business, and the principals (specific people who are authorized to sign and do business on behalf of the company) must be listed by name in the company’s corporate filings. Even if a company is incorporated in one state, under U.S. law they must register as a ‘foreign corporation’ to perform business in a separate state, so this technique should always yield some result.
Exceptions do apply, however, and corporate law is highly complex, but the important thing to remember is that you should always be able to find a record for your client in the Secretary of State’s Website in the company’s home state, and you should always be able to find evidence that the signatory is a principal of the company and has the legal authority to enter into an agreement on behalf of the company.
These corporate records are generally free and available on the Web. Simply search for the Secretary of State Website in the company’s home state and find your way to the corporate records section. Don’t know the state in which your client is incorporated? Just ask them — it’s a standard business practice to request this kind of information about a new client.
Now that we know that the organization named on the contract exists, and the signatory is empowered to execute the contract, let’s learn a bit more about our client before we start investing in the project.
How much work are you willing to do for a client before you get paid? It’s easy to say, "We need 50% up-front," but that’s not always achievable. Larger clients, for example, tend to have a 15-30 day cycle on their accounts payable, and are used to that payment cycle being taken seriously. So, you’ll have to make a decision about how much "credit" to extend them. Here’s how.
Having established that this is a legitimate firm, we can expect to find some history about the company in the public corporate records. There are many sources of this information:
- credit reporting companies (like Equifax)
- corporate credit and information bureaus (like Dunn & Bradstreet)
- consolidated information sources (like knowx.com)
- consultants who specialize in checking out company backgrounds
We’ll start with the free stuff, and move on from there. Once you’ve reached a level of comfort with this client and are confident that you’ll actually get paid, you can forget the whole thing and move forward with confidence. Until then, we’ll keep digging until we have the information we need to make the right decision.
At the Secretary of State Website, we learned the corporate status and identified the principal individuals associated with the company. We can take advantage of that information by doing some basic Google searches using the names of the principals listed. Be creative, and you might find press releases, media mentions, or even court records related to these people. You’ll be surprised how much you can learn with 5 minutes of snooping once you have the names of the people involved with the firm! Try to get a feel for how long the company has been doing business, and how successful their efforts have been.
Next, we’ll move to the Dunn and Bradstreet (DnB) Website, found at http://www.dnb.com/. You’ll probably be most interested in the Small Business section. Companies actually pay to be listed in the DnB database because DnB is one of the key credit reference organizations on the Web. However, almost any company will be listed there if they’ve existed for some time, because DnB also offers basic listings free for any company. While it’s not conclusive, a DnB listing supports the evidence that the company is legitimate, as DnB periodically confirms its records against those of the government, in addition to listing its own metrics for risk and financial stability.
In many cases, DnB will offer additional detail for a fee. This detail is usually related to a company’s sales and payment history as reported by other DnB members. This is sometimes useful if you’re researching a company aggressively, but can be unnecessary. And don’t forget to make sure that your company is listed, too! After all, you might be on the other side of this process one day if a potential client does research to check your company out.
At this point, you’ll need to start paying for further research, or spending some real time learning about the resources and doing it yourself. Fortunately, there are Websites that will do a comprehensive scan of the public records for a modest fee, typically US$20-$50. My resource of choice is http://www.knowx.com. Knowx offers a handy feature that allows you to search for a company by name first, then view what kind of information KnowX has about that company. If Knowx reports that there are record types that you’re interested in, buy the report. If not, you lose nothing.
At this point, you should have accumulated a fair amount of info about your potential client. Now it’s time to make decisions. If there is little or no information about the company, you can assume it’s either brand new, is not a recognized business entity (the client’s a sole proprietor, for example), or is lying about it’s identity. In this case, you’ll have to make a judgment call about how to move forward.
In most cases, however, you’ll be looking at your results and assessing the ‘big picture’ about the company, considering things such as:
- Have there been any bankruptcies? When?
- Is it currently in litigation with other clients or partners? Have other vendors had legal proceedings with this company?
- Has the company been late on its state or federal tax filings? This is found on the Secretary of State site in some cases.
- Is the business’s corporate status ok? A corporate status of ‘forfeit9rsquo; or ‘deferred9rsquo; might be major a warning sign.
- Are any of the principals involved in other litigation? Perform a name check on all the principals to see if they are litigant or otherwise problematic business people.
- Are there any sales/size estimations or reporting? DnB sometimes provides this information, but be sure to note if the data is reported or was simply estimated by Dunn and Bradstreet.
- Does the company’s self-description correspond to the records you’re finding?
- Has the company been involved in successor corporations, complex stock dealings, or other activities not consistent with their size or business type?
- Are there any liens, judgments, lawsuits, or injunctions about the company? If so, look for the Website of the court that holds the information about that event — they might have publicly available records, too.
Finally, be on the lookout for anything that’s just plain suspicious. Use your best judgment and you’ll be able to make the right decision, armed with lots of highly relevant information.
Let’s look at some real-world examples of how the above process can result in a good business decision that protects you without interfering with your ability to grow.
Example 1: A Small Company’s Record Doesn’t Match your Signed Agreement
Recently, I signed a small ($3,000) agreement with a company in Los Angeles. They were in a great hurry to get started, and returned the signed contract almost immediately. However, I found no evidence of their company in any records at all, including a Knowx.com business search.
I sent a friendly but firm email to the company, thanking them for their business but explaining that the contract was unenforceable because their business couldn’t be found on any corporate record anywhere. As a result, I explained, my company could not extend any credit whatsoever and a full payment would be required before development could begin.
The client balked at this, complained, denied, and then promptly overnighted a cashier’s check to my office. It turned out, they were a sole proprietorship and the ‘President9rsquo; liked to add "Inc." to the name to make things look more professional. The contract would have been totally unenforceable, and I was glad I demanded the full-payment.
Example 2: A Legitimate Company has Ongoing Litigation or Judgments
Another company I worked with seemed very legitimate when a basic background check was performed. Later in the project, however, they became a non-payer and I began considering how much credit I would be willing to extend while waiting for payment.
I invested approximately $100 in various corporate records searches. I learned that the company had no large-scale litigation against it (which I already knew), but that 2 of the 3 the principals were immersed in an ugly court battle in civil court. In addition, they owed $300,000 USD in back taxes to the State of Delaware and a local print shop was taking them to small claims court. I learned all of this from a US$20 search on Knowx in the span of 5 minutes. Needless to say, that company’s credit line was promptly ended.
Incidentally, I was never paid by that client. I only wish I’d done a bit more research before the whole thing started…
Example 3: A Large Company Has a Clean Record
Sometimes a company is just fine, and it’s a good feeling signing a contract with a firm that has a clean record and perfect history. Keep in mind that every company will have the occasional legal hassle, stock reissue, change in the board of directors, or other corporate event. The important thing, though, is that they are stable, honest, and legitimate.
When a company "checks out clean", don’t think that your investment in their history check is wasted — you’ve simply bought some security for yourself and eliminated a risk factor from your business.
In the end, you can save yourself incredible amounts of time, stress and money by doing a bit of due diligence at the beginning of a client engagement. Considering the low cost of record searching and the incredible hassle associated with collections and litigation, pre-engagement research is about the best insurance policy you could ever find.
Protect your bottom line, yourself, and your business by doing a little work up-front, and you’ll thank yourself in the future!