Before you hire, do some homework: backgrounds checks are becoming standard HR practice, but you need to tread carefully.

Bad hiring decisions can affect your company's finances as well as the morale and productivity of your staff. In addition, terminating a bad fit will require you to start the hiring process all over again. As the use of background checks has become more widespread and the Internet has made the process of obtaining background checks easier, the lines around what can and cannot be checked have become blurred. While the Internet makes it easy to find an applicant's life story, some of the information readily available cannot be taken into consideration for hiring purposes.

Q: What items are included in standard background checks?

A: Background checks can range from the simple verification of Social Security numbers and driver's license records to complex credit and criminal record checks. Tracing a Social Security number gives prospective employers insight into names the applicant has used and the addresses he or she has had. In certain industries, more extensive checks are warranted. If an employee will handle money, a credit check makes sense. Credit reports can include bill-payment history and trends in late payments and overdrawn accounts. Some states limit the time information remains on an individual's credit report to seven years. Two of the credit-reporting agencies provide special reports for prospective employers that only include information that can legally be used in hiring purposes.

If an employee will work with children, enter customers' homes or provide health care, checks of criminal records and sex-offenders lists are very important considerations and are required in many states. If the company is in a technical field, state licensing records and verification of education may be important. Some companies search workers' compensation records or medical files, depending on the parameters of the job. The Americans with Disabilities Act and many individual states have specific laws that govern when an employer may lawfully request this information and how long it stays in the public record.

It's important to remember that some information is off-limits in a hiring situation. Bankruptcies older than 10 years, paid tax liens after seven years and certain criminal records are not public record.

Q: How do I obtain background checks?

A: Obviously, the time and energy needed to conduct background checks is extensive. Legal experts recommend assigning this task to a professional. Business owners who conduct their own background checks can be held liable if a criminal record is missed.

Lawyers also warn against impermissible use of data. Employers who purchase public-record information must be aware of the legal use of information under EEOC regulations and the Fair Credit Reporting Act, which applies to criminal and credit background checks provided by a consumer reporting agency. Many databases are compiled using records that may not be provided by the courts and, therefore, are not legal. For example, some states have rules regarding the use of arrest records that did not result in convictions. Unless information is compiled through the courts, it often cannot be used in the hiring process. Companies that provide background checks range from basic data brokers to vendors that specialize in pre-employment screening.

[ILLUSTRATION OMITTED]

RELATED ARTICLE: Fair Credit Reporting Act

For an explanation of the Fair Credit Reporting Act and its impact on employers visit the Federal Trade Commission Website at www.ftc.gov/os/statutes/fcra.htm.

Tom Shehan is Detroit area president of ADP Total-Source, a member of the Detroit Regional Chamber.