Background checks are an essential part of the hiring process for a reason. They can provide you with critical information that will impact your final hiring decisions, however, haphazardly digging into an applicant’s background can have serious, even devastating, financial consequences for a small business owner. Here are a few tips on how entrepreneurs can avoid ending up in an unnecessary legal entanglement.


Be very careful about social media searches

According to this ERE Media piece, 2015 is the first year that millennials will outnumber baby boomers in the U.S. workforce. As such, you may be tempted to perform a social media search on potential hiring candidates because millennials are known to freely share personal details on sites like Facebook and Twitter. You should ignore this urge. The problem with doing that kind of search is that you may accidentally uncover information that reveals one of your applicants is part of a protected class. If you choose to not hire that applicant after viewing their social media feeds, you could end up in court facing an allegation that you disqualified them because of something related to their ethnicity, sexual orientation or religious background. If you do choose to include a social media search as part of your background check, have it performed by a third-party who does not work for your company. That way, they can inform you of any red flags that are completely unrelated to any protected characteristics, and you’ll have a legal record of that fact.


Avoid credit checks

Another aspect of the background check to think twice about is running a credit check on your applicants. While some view a credit check as giving useful insight into a potential hire’s integrity, several state governments disagree. As mentioned in this Forbes article,  California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington now all have laws on the books that prohibit employers from disqualifying applicants on the basis of their credit history. Generally, these laws hold exemptions for employers in the finance industry, but things get a little hazy after that. Unless you have a specific reason for believing that the information uncovered by a credit check would be a deal breaker, don’t do one. It’s not worth leaving yourself open to potential liability.


Communicate with your disqualified applicants

If you choose not to hire someone based on information uncovered in their background check, let them know why they were disqualified. By making that disclosure, you can prevent a lawsuit down the line by an applicant who had come to their own false conclusion about why they were not offered a position. It’s never easy to tell someone that you’re not hiring them, but the temporary discomfort from an unpleasant conversation is in no way equivalent to the mental and financial stress that would come with being subject to a U.S. Equal Opportunity of Employment Commission investigation.

This article was written by Mario McKellop of for CBS Small Business Pulse.


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