Background Investigation

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Meaning and Importance

The recruitment process is crucial for any organization since the selection and retention of a qualified and reliable workforce is essential for smooth operations. There are numerous reasons for organizations to incorporate background checks during their selection processes and a variety of methods are used to carry out a detailed investigation.

Generally, a background check is a process of analyzing criminal, personal, financial and commercial records of an individual before employment. These are essential especially in cases where jobs require high security or a position of trust and loyalty. These investigations are carried out by either government agencies, private companies or the organization itself. The results in terms of past record, employment verification, criminal record and credit score allow organizations to make safe decisions on whether to accept or reject an application.

The checks allow organizations to evaluate individual qualifications, character and personality, and on the job behavior. These evaluations identify or eliminate various hiring risks associated with that individual. The recent rise in security checks and stringent regulation has made it mandatory for many organizations to conduct background investigation before employment (Privacy Rights Clearance House, 2009 June).

Why Investigate?

Employers check current and potential employees for numerous reasons such as negligent hiring, current events, inflated and false information, federal and state laws, and the “information age”. These are described in detail on the following page.

Negligent Hiring

Once the organization hires an employee, it would automatically become liable for his/her actions, therefore, it is imperative for an organization to be careful while selecting employee. This threat of liability is one of the main reasons for organizations to be cautious. An instinctive approach towards hiring is therefore unreliable in these days since a bad hiring decision can have a severe impact on the organization’s budget, productivity and reputation (Jody Lentz, 2000).

Current Events

The world has changed a lot, and numerous current events have an important influence in hiring decisions for e.g. the terrorist attacks of September 11, 2001, have had a major impact on organizations. Security and identity verification has increased extensively, and potential job candidates are being scrutinized more comprehensively these days to ensure the highest levels of security, trust, and reliability. Moreover, corporate scandals are a rising trend in today’s society and pre-employment background investigations seek to minimize them.

False and Inflated Information

Research has shown that almost half of the reference checks conducted on employees have displayed false or inflated information as compared to what is written on resumes and curriculum vitae. Such resume fraud in the form of stretched dates of employment, inflating past accomplishments and skills, exaggerating education and degree fabrication, faking credentials and providing fraudulent references has become a common practice within job applicants; this in turn gives organizations more the reason to conduct verification analysis (Sam H. Della L. Dekay, 2008).

Federal and State Laws

Many federal and state laws have made it mandatory for certain organizations to conduct background checks. For e.g. many states require criminal background checks on individuals working with children, elderly or disabled people. Organizations are encouraged to contact the FBI’s National Crime Information Center database for investigation. Many state and federal jobs themselves require extensive background checks before security clearance is granted (Jody Lentz, 2000).

Information Age

The information age also serves as a reason to conduct background checks. With the given advancement in technology, many organizations are finding it less costly to conduct background research and load up their databases with personal records of employees.

Employment Decision Making

Lastly, the most important reason to undertake background research is to help equip hirers to make effective decisions in hiring employees. An employee can make or break an organization, therefore, in light of the above reasons; the employer must make an informed decision. Moreover, the data collected also helps employers differentiate amongst potential employees and helps them select an employee who is best suited for the job (Jody Lentz, 2000).

Types of Background Research

There are a variety of background check procedures and methods available to organizations to conduct widespread investigation for employee analysis at the pre-employment stage. These include driving records, social security number, bankruptcy records, and property ownership, past employers, vehicle registration, educational records, character references, military records, personal references, credit records, neighbor interviews, state-licensing records, incarceration records, criminal records, workers ’ compensation, medical records, drug test records and sex offender lists. We will be talking about a few of them and the important information they provide to employees. We will also talk about how this information is beneficial for employers’ decision making (Mark N. Wexler, 2006).


The background checks encompass a wide array of checks, but one of the most important checks is by no doubt the reference check, both personal and character. Most potential employers will demand a reference in the form of a recommendation letter from a former employer. This usually occurs when the company has shortlisted potential candidates based on resumes. These reference letters are a form of attestation to the skills and qualifications an applicant possesses. Former bosses, co-workers, and colleagues make the best references, but the decision regarding a letter of reference is usually left to the discretion of the applicant themselves.

An important fact to consider here is that few employers are willing to provide references due to concerns about litigations; however, they do attest information such as employment dates, qualifications, job titles, and salary history.

Another important point to note is that according to the requirement of state and federal laws, a prospective employer should always ask for the permission of the applicant before contacting the applicant’s references for further clarification or information.

Character and Personal references are other major sources of information which can be very helpful to employers. Character references, as the name suggests, deliver information regarding an individual’s character for e.g. the values and ethics that are part of the person’s character, strengths and capabilities etc. Negative characteristics are excluded from character references for obvious reasons. Personal references are also similar to character references but focus more on the applicant’s qualifications, experience and capabilities etc (Patricia M. Haris, 2005).

Information Excavated through Reference Checks

Reference checks provide employers a platform to excavate detailed information regarding an applicant. Prospective employers look for references and reference letters themselves to answer some of the following questions; employment dates, reason for leaving company, salary history, job title and responsibilities, applicant’s punctuality and behavior, promotions, accomplishments and achievements, would the former employer re-hire the individual if the situation arises or any other details the former employer might want to share. This information is highly crucial for employers since it is not available in resumes or curriculum vitae and is not easy to decipher through interviews. The information forms a basis for the final decision of employers on whether to accept or reject an employer’s application (Patricia M. Haris, 2005).

Information Use

The varieties of checks discussed earlier provide employers with a stream of information suitable for successful decision making. The information included largely depends on the degree of sensitivity of the information and the reasons for which the investigation is conducted for e.g. someone submitting an application for a post in the FBI would go through extensive checks given the importance of the job.

Criminal and incarceration records are available at statewide repositories and give employers access to a national crime file pertaining to the specific individual. They provide information regarding the criminal history of an applicant, including the number of offenses, trials undertaken, and fines imposed etc.

The hiring of illegal workers has become a major source of concern for US authorities, thus, information such as legal working status, citizenship detail, and immigration files provide employers with a detailed background of the employee’s ethnicity. A major source of this information is the Social Security Numbers provided to citizens in the US (Patricia M. Haris, 2005).

Fair Credit Reporting Act (FCRA)

Background investigations are not unregulated. Certain rights of applicants have to be taken into consideration while performing these checks as we will discuss later. The Fair Credit Reporting Act is part of the American federal law that regulates the collection, use and dissemination of consumer information. In the context of our discussion, the consumer is the job applicant him/herself (Privacy Rights Clearance House, 2009 June).

Consumer Reporting Agencies

Consumer reporting agencies (CRA’s) are units that are responsible for the collection and dissemination of applicant information to be used for credit evaluation for employment purposes. Credit bureaus, a form of CRA, hold consumer credit reports in their databases. However, CRA’s have certain responsibilities under the FCRA’s requirements. These include the provision of information to the consumer him/herself for verification and to take appropriate steps to settle disputed information, removed negative information cannot be re-entered without consumers consent and lastly, the CRA’s cannot retain negative information for an excessive period of time for e.g. bankruptcies and judgments can stay in the consumer file for seven years only.

Rights of Applicants

Job Applicants possess certain rights when it comes to background investigation. Firstly, the applicant has the right to receive a copy of his/her background check file; this is a requirement of the Fair and Credit Transaction Act of the US federal law. The applicant has the right to ask questions regarding screening and background investigation. If the employer decides not to hire an applicant based on the information obtained through background checks, the employer is liable to provide the applicant with a “pre-adverse action disclosure” before making the decision. This gives the applicant the right to dispute the information based on accuracy or completeness. Lastly, background checks should not tap into the personal lives of applicants, and if certain information such as educational and medical records are absolutely necessary, then the employer must take the applicants permission before accessing the information (Privacy Rights Clearance House, 2009 June).


While some people are indifferent towards background checks, others have a negative approach towards them. They feel uncomfortable about investigators scrutinizing their personal history and past records. In-depth information can result in the exposure of certain information taken out of context that is unnecessary and immoral. Moreover, if for e.g. a person has been liable for some minor criminal activity, this does not mean that the person will never be employed. According to the Fair Credit Reporting Act (FCRA) of the US employment checks can tap into arrest records for up to seven years only and not beyond that (Jody Lentz, 2000).

To resolve these issues, the US authorities have made it mandatory for employers to provide employees with a report so that any inaccuracies and misunderstandings can be dealt with before hand. For e.g. if a company does not want to lose a valuable employee, it may understand his/her credentials in the letter of reference. The FCRA does not prohibit employers from asking questions based on an applicant’s resume or curriculum vitae, but out-of-context and irrelevant research and investigation is strongly discouraged. Moreover, the FCRA also requires the employer to take the applicant’s permission before accessing or reviewing certain medical, education and military records (Privacy Rights Clearance House, 2009 June).


Background checks and investigations are an integral part of any organization to ensure the selection of qualified and trustworthy employees. The current events in the corporate as well as the external world have made it mandatory for background investigations to be conducted, although laws have strict criteria specified based on how investigations are to be carried out.


Jody Lentz. (2000). Employment Screening: Risk Management Tool and Essential Compliance Utility. Home Health Care Management Practice, Vol 11, 16-20.

Patricia M. Haris. (2005). The Criminal Background Check in Hiring Decisions. Journal of Contemporary Criminal Justice, Vol 21, 6-30.

Mark N. Wexler. (2006). Successful Resume Fraud. Journal of Human Values, Vol 12, 137-152.

Sam H. Della L. Dekay. Lying on the Employment Resume. Presented at the 2008 Association of Business Communication Convention. Web.

Privacy Rights Clearance House. (2009 ) Employment Background Checks. Web.

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