Managing Regulatory Compliance in Background Checks in 2023

Managing Regulatory Compliance in Background Checks in 2023


A detailed employee background verification is an integral part of the hiring process. It goes above and beyond the assessment of capabilities and fitment of the applicant and ensures the security of the employers, their other employees, and business operations.

A wrong hire can result in steep costs in terms of reputation, resources, and business continuity, which is why most employers have introduced verification checks for all new hires across functions and seniority levels.

A typical background verification could look at some or all of the following details of the prospective employee:

  • Education and employment history
  • Credit scores
  • Driving records
  • Criminal antecedents
  • Social media usage

Legality of employee background checks

With companies operating in and hiring from around the world, it is important for them to comply with the respective laws that govern the different verification processes. This is because a check that is legal and admissible in one country might not be so elsewhere, hence the employer must be familiar with the respective laws in different countries .

Let us start with the basic checks about the education and work experience stated by the applicant. These are the details based on which employers select a new employee, so, understandably, these are permitted in every country of the world.

A criminal record check, on the other hand, has nuances that vary by country. In the United States of America , employers can screen the name of an applicant across the national criminal database and the sex offenders registry. For carrying out a similar check in the United Kingdom, the employer would need to provide reasonable and necessary reasons to be able to carry out the check.

Furthermore, medical screenings or retrieval of family medical records are only permitted in some countries if the employer can provide a reasonable justification in terms of the job role. Similarly, the job role also dictates whether retrieval of credit scores or carrying out financial checks would be allowed.

The social media profiles are also increasingly being used to conduct discreet checks. Although social media content is already in the public domain, there is a thin line between what is legal and what violates someone’s privacy. This is especially relevant if the hiring decision is based on the information available in someone’s social media profile.

Employee background checks and privacy concerns

The primary concern with any employee background verification is the possible intrusion into the individual’s privacy. Two things have made this slightly more complicated. First, the ease with which our digital footprints can be tracked today, and second, the ambiguity or even absence of laws regarding individual privacy in some countries.

European countries are covered under the GDPR (General Data Protection Regulation) while the USA has FCRA (Fair Credit Reporting Act), but the legal viewpoint is not so defined in countries like India. India currently does not have data privacy laws and ‘privacy’ is also not specified in India’s Constitution as being a formal right of citizens.

There are certain pieces of legislation like the IT Act of 2000 and the IT (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules of 2011 that outline actionable parameters on personal data. When it comes to privacy, what both employer and employee need to consider is the need for such information for the assigned jobs, and whether the information is available elsewhere anyway.

How can companies avoid legal trouble ?

The Human Resource teams need to calibrate their policies and processes based on the countries they operate in, and in the case of larger countries, also act in accordance with state or local laws, if applicable. In general, though, these are some of the best practices that can help an employer collect and use the right information responsibly without inviting legal action:

  • Informing the applicant about the checks and getting consent
  • Not discriminating in hiring decisions based on information collected
  • In case a hiring decision has been taken based on such information, inform the applicant accordingly
  • Retention and disposal of information responsibly and in compliance with appropriate laws

All companies might not have the expertise or time to check the background of all their external hires. This is why many companies rely on experienced service providers for these services. Before engaging such services, it is important to ensure that the vendor has the necessary authorizations in all countries where their services would be used, and sound experience of working for other clients, preferably in similar industries.

Final thoughts

While no one can deny the importance of verifying the prospective employee’s background and credentials, employers are expected to collect information transparently and use it responsibly. This helps the employment relationship start on a note of trust, and avoids legal imbroglios. As we step into 2023, a combination of management and compliance will help make employment checks smoother and more effective.

About cFIRST

cFIRST is a global leader in digital background screening services that lets companies make better-informed hiring decisions and create robust workforces. Over the years, cFIRST has become a trusted verification partner for several Fortune 500 companies and new-age start-ups.