Not Conducting Background Checks Can Be Costly

Employers who don’t conduct pre-employment background checks to save on time and cost may unwittingly open the door to potential lawsuits, profit loss and reputation damage.

Experts say the cost of conducting a background check is minimal compared to the damage of not running one.“

A background check costs less than the average employee’s first day on the job,” says Jared Callahan of ESR Check, a pre-employment screening company based out of Northern California.

The primary reasons for an organization to conduct a background search would be to reduce or prevent theft and embezzlement, and to reduce liability for negligent hiring, according to the Society of Human Resources Management.

Here are some ways that your company can save in the long run by conducting background checks:

Situation #1:

An employee assaults another employee because he feels the other employee is trying to get him fired. The assaulted employee later finds out that other employee had criminal charges filed against him because of past workplace violence. The assaulted employee files a negligent hiring lawsuit and claims that the employer didn’t adequately protect the company’s employees.

  • If the company ran a criminal background check previous to hiring that person, they would have found that the employee has a history of violence, and possibly could have prevented the assault.
  • Violence in the workplace is more common than you may think—nearly 355,000 businesses will experience a workplace violence episode in any given year, according to a study done by the Federal Bureau of Investigation.

Situation #2:

A new hire just finished two months of training and quits without notice. Your company has to spend more time and money on finding another qualified individual.

  • Running a work-history check on potential employees can uncover how long they have worked for previous employers and if they are more likely to leave after a short period of time.
  • Hiring employees who are more likely to leave quickly may be critical to your bottom line. It is estimated that 30 percent of a worker’s first year potential earnings could be lost due to a bad hiring decision, according to the U.S. Department of Labor.

Situation #3:

You just found out that one of the senior account executives for your financial consulting firm has been embezzling money for the last year.  You later find out that this now previous employee has a history of embezzlement.

  • Accessing a potential employee’s credit history prior to employment can give you insight on whether or not they are more likely to commit fraud.


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