Should You Do Background Checks for Contractors and Temporary Workers?

Posted: May 15, 2018

Are you conducting contractor background checks and screening your part-time workers? By the year 2020, Intuit predicts the gig economy (an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements) workers will represent more than 40 percent of the U.S. workforce. Contractors and temporary workers may be supplementing their full-time income or working odd jobs to get by. Regardless, the number of these workers continues to grow. It’s more important than ever to ensure all your workers are who you believe them to be. Contractor background checks that include a close look at employees’ past jobs, academic and criminal record checks, professional qualifications, and other checks, can give you the peace of mind that you need to justify new hires to your business.

Who’s a Part of the Gig Economy & Why Does It Matter?

If an individual is not employed full-time, they are part of the gig economy. These workers may include temporary workers, consultants, independent contractors, staffing agencies’ temporary employees and subcontractors. There are many benefits to hiring contract workers, including improved flexibility and productivity for workers and the business. You are also able to lock in lower fixed costs and only hire workers when you need help the most. But, the risks of independent contractors are also worthy of attention. When any worker representing your company makes a mistake that catches the eye of the press (whether it’s a data breach, violent crime, theft, or otherwise), the public sees them as an employee of the company, whether they are employed full-time or not.

Which Laws Should You Be Aware of Performing Contractor Background Checks?

When determining if you should conduct contractor background checks, you should consider federal and state background screening laws, as well as your organization’s own internal policies. For example, if your organization is in a highly-regulated industry, such as healthcare, government, or finance, you may be governed by more regulations regarding background screening. Sometimes these regulations will include contingent workers, but not always. In the U.S., the Fair Credit Reporting Act (FCRA) regulates the use of background checks. The FCRA includes “employment purposes” as a valid reason for obtaining and using a consumer report on an individual. The Federal Trade Commission (FTC) enforces and interprets the FCRA. The FTC states that you should interpret the phrase “employment purposes” broadly, and it should include independent contractors. Your organization should also consider state and federal equal employment opportunity laws when running background checks on contract workers. You should follow these regulations when it comes to government contract requirements, client agreements, and common industry practices. The Equal Employment Opportunity Commission also provides guidelines for organizations wishing to conduct background checks on contractors. To follow these guidelines, your background checks must be: specific to the job, consistently applied, and necessary to the business. As a general rule, employers may conduct background screenings on any individual performing work at their work sites. This includes all full-time employees and contingent staff. Many organizations conduct background checks on all types of workers to mitigate potential risks and liabilities. Local, state, and federal laws require some employers to conduct these checks, depending on industry and population served.

How to Build a Background Screening Program for Contingent Workers

So, how do you put a program for contractor background checks into place?

• Consider program management. If you have a large number of independent contracts, you’ll need someone to manage when and how often these screenings will take place. If you’re working with a staffing firm, determine who will manage the background screenings – either you or the firm.
• Determine what’s considered a “pass” or a “fail.” Determine which results you will and won’t accept for contractors working with your business. Then put everything in writing.
• Decide what types of background checks are a fit for each position within your organization. If one position deals with sensitive information and another doesn’t, these roles may require different background checks. Or, you could choose to perform the same background screenings for everyone in your organization. This streamlines security across the board.
• Choose the right background check vendor and technology. Doing screenings in-house takes time away from other business-building activities and can be confusing from a compliance perspective. Choose a background screening company that offers solutions that fit your needs, including checks for contractors and other contingent workers.

Remember that independent contractors must sign specific release forms before they undergo background checks. In addition, if you aren’t using the contractor’s services because of the outcome of the background screening, you must follow all the provisions of notification outlined under the FCRA.

Conclusion

Government regulations are murky around performing background checks for contingent workers, so be sure to build a partnership with a trustworthy background screening provider who can offer great customer service and tailor services to your organization’s unique needs. This is the best way to ensure you’re compliant and protecting your organization from potential hiring risks.