Imagine you’re an entrepreneur contemplating a new hire. Along with the many stressors that new hires pose for startups, you’re faced with the prospect of getting to know everything you can about a complete stranger. Fast. And you sure don’t want to end up hiring this guy.

“Tell us something about yourself”

Marie MacDonald was born in Ireland. She went on to live in England, then Connecticut, New York, and finally Wilmington, NC, where she is now director of Human Resources at CastleBranch. She was too young to have established a credit record in Ireland — didn’t start building one until she moved to Connecticut — so she was effectively off the grid before then. “If I were a criminal prior to that,” she says, “it’s possible that no one would be able to tell.”

That’s where background-screening companies, a.k.a. consumer reporting agencies, come in. And they can be among your finest allies as you scale up. The best CRAs are accredited by the National Association of Professional Background Screeners, a nonprofit trade association.

Forget CSI

Hollywood and TV have led us to assume that a fingerprint search will turn up any person’s complete dossier, from criminal activity to their PTA involvement. Wishful thinking. There is no true national database — no universal government database — containing complete, current records regarding a person’s criminal history. Many different data sources exist. The most commonly cited is the “FBI database,” which is really a collection of different systems organized under the National Crime Information Center. Databases are not integrated well outside NCIC, and the National Instant Criminal Background Check System is spotty at best.

According to NAPBS, “Fingerprint-based searches of the FBI database return an FBI Identification Record. This record is a listing of information taken from fingerprint submissions in connection with arrests and, in some instances, federal employment, naturalization, or military service.” But that search won’t tell you a thing about past employment, driving records, drug testing, SEC filings, or credit history. The kinds of things you may want to know when starting a company with someone.

OK, so while there may be no true “national” database for background checks, there are useful federal records, those drawn from the federal court system — cases involving violations of federal law such as crimes that cross state lines or occur on federal property; or crimes like child pornography, tax evasion, identity theft, or interstate kidnapping.

Federal crimes and state crimes are recorded separately. And that’s the real challenge.

“Screeners need a more thorough sense of what’s shown in records of counties where the subject has lived,” says Taylor Cromartie, director of Compliance at CastleBranch. Think of all the permits, taxes, fees and registrations — the key demographic data on each of us — that a county government tracks. Counties are the critical, primary source for a broad-spectrum background check. “Counties are the source of most data for criminal records excluding the federal court system,” Cromartie says. North Carolina is unique, however, in that a statewide search will pull data from all of the state’s 100 counties.

Not all background checks are created equal. Employment-background checks may access information from a wide variety of sources such as

  • criminal and civil records at county courthouses and federal courts
  • Driving records
  • Drug testing
  • Employment or education verification
  • Professional licensure
  • PATRIOT Act searches
  • SEC filings, FINRA and Federal Reserve sanctions
  • When mandated by law, the FBI’s criminal database system

So, Cromartie reminds us that customizing your screenings to your particular needs is critical to a thorough, effective search.

FCRA compliance

Professional background screening is a highly regulated space. Background checks are legally governed by the Fair Credit Reporting Act, the same law that regulates how consumer reports like credit checks and traffic reports may be used, and also by state privacy and consumer-protection laws. So to minimize your legal exposure, a sound background check is one cost you may not want to low-ball.

Some of the shortcomings of low-cost, high-risk background checks are that, in many of the databases they depend upon, information is out of date, some levels of criminal charges are missing, people are listed only by their current name, or the databases capture criminal information from only the current state or county of residence.

Know your people

Remember that checkbox on every employment application that asked if you’ve ever been convicted of a crime? Going the way of the dodo. That’s because “ban-the-box” laws are quickly proliferating throughout the nation as a way to lower barriers to employment for people legitimately trying to get past old convictions. The laws apply most to public employers but are quickly spreading into the private sector too, even among large employers like Walmart and Target. You may see headlines about lawsuits against such giant corporations for incorrectly collecting or misusing banned information, but employers of all sizes are being sued at an unprecedented rate in recent years.

If you’re entering a market that’s highly regulated and scrutinized by the government — the cannabis startup space, medtech and fintech are three examples — knowing all you can know about your potential partners, co-founders, agents or investors can bring unequaled peace of mind. You don’t want any surprises when the government permitting agencies do their own background checks. “When dealing with government, you should be able to show that everyone who’s working with you should be working with you,” Cromartie says.

Janey Roth, account executive at CastleBranch, adds that “properly vetting your employees can reduce turnover” as well.

Go with the pros.

When choosing a CRA, look for their accreditation. It should be clear from their website that the company is accredited by NAPBS and is not just a member. Anyone can be a member.

Professional screenings are fast — generally returning results within 48 to 72 hours — and more accurate. Your CRA can tailor the search to provide more a complete picture of the people being screened. Depending on your needs as an employer, these screenings may include education and employment verifications, references, and driving records.

Screening is complex, and databases comprise one facet. NAPBS recommends using databases only as supplements to a screening protocol executed by professionals trained to look across multiple data sources and to evaluate them. Most large companies don’t have the staffing or expertise to do it right, to say nothing of startups just entering the fray.

For more information on the importance of professional background screenings, check out NAPBS’s searchable resource library. Get access expert guidance and services by contacting CastleBranch, a Fortune 500 screening and compliance powerhouse. tekMountain at CastleBranch stands ready to help you integrate your screenings into your total startup strategy.


This blog was produced by the tekMountain Team of Sean AhlumMike PattonRod WhisnerAmanda SipesZach Cioffi, and Janey Roth with lead writer Bill DiNome

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