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Job Search Tip. More companies are conducting background checks on potential employees than ever before. Find out why, whether they have to notify you or not and what types of background checks companies do. Plus learn how you can prepare for a background check to avoid surprises.

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The Background on Background Checks

By Bonnie Lowe

In one of my past lives I held a Top Secret clearance as a Civil Service employee working for the Air Force. So I am familiar with background checks. But many job seekers are not. Here's a little background on background checks...

More companies are doing background checks on potential employees these days than ever before. Why? Here are just a few of the reasons:

1. Studies show that 30-40% of all job applicants put false information on their resumes or applications, and "exaggerate" their qualifications during interviews. Can you blame employers for wanting to verify claims made by desperate job seekers?

2. Lawsuits for "negligent hiring" are on the rise. If an employee’s actions hurt someone, the employer may be liable. So when considering an applicant, it's in the company's best financial self-interest to find out if that person has done anything in the past which might indicate future problems.

3. Child abuse and abductions have resulted in new laws in almost every state that require criminal background checks for anyone who works with children.

4. The September 11th attacks have resulted in heightened security and identity-verification strategies by many employers.

5. In addition, many state and federal government jobs require a background check, and depending on the kind of job, may require an extensive investigation for a security clearance.

So there are several reasons why employers perform background checks.

Under federal law, the employer must obtain the applicant’s written authorization before the background check is conducted.

The types of background checks companies do usually depends on the job, but they typically include the following:

Employment Verification

Often a potential employer will contact an applicant's past employers. Many states have laws which prohibit employers from intentionally interfering with former employees' attempts to find jobs by giving out false or misleading references, but a former boss can say anything TRUTHFUL about your performance. However, most companies have a policy to only confirm dates of employment, final salary, and other limited information.

Education Verification

This is done to verify degrees and certifications listed on resumes or applications. Under federal law, specific records such as transcripts and discipline records are confidential and will not be released by schools without the authorization of the student. However, a school may release "directory information," which can include name, address, dates of attendance and degrees earned.

Drug Screening

Many large corporations have a policy to drug-screen all potential employees prior to starting. In this situation, the job offer is contingent on you successfully passing the drug screen.

Credit Checks

This type of check (sometimes called a "consumer report") is most often done by companies where employees have access to money, sensitive personal and financial information. Some employers also use your credit history to gauge your level of responsibility (they believe if you are not reliable in paying your bills, then you will not be a reliable employee).

In addition to your payment history, a credit report typically includes information about your former addresses and previous employers. Employers can use this as one way to verify the accuracy of information you provide on an application or resume.

Federal law prohibits employers from discriminating against applicants because they have filed for bankruptcy.

Criminal and Motor Vehicle Records

These types of background checks are not as common but some companies have a policy of checking criminal records. Although arrest information is a matter of public record, in most states employers cannot normally access the arrest record of a potential employee (there are some exceptions, such as for law enforcement positions). If the arrest resulted in a conviction, that information can be obtained. In general, civil suits, civil judgments, and records of arrest more than seven years old are not reported (the seven-year limit may not apply to criminal convictions, depending on your state).

Companies check motor vehicle records when positions involve the operation of company vehicles and equipment.

Employment Application Accuracy

Some companies verify the accuracy of the information you provided on the employment application, including what you listed as your most recent salary. When you complete the application make sure all information is accurate.

What Can You Do to Prepare?

Take the following steps to reduce the chances that you and/or the potential employer will be "surprised" by information found during the background check:

1. Order a copy of your credit report. If there is something you do not recognize or that you disagree with, dispute the information with the creditor and/or credit bureau before you have to explain it to the interviewer.

2. Check court records. If you have an arrest record or have been involved in court cases, go to the county where this took place and inspect the files. Make sure the information is correct and up to date.

3. Check DMV records. Request a copy of your driving record from the Department of Motor Vehicles, especially if you are applying for a job that involves driving.

4. Do your own background check. If you want to see what an employer’s background check might uncover, hire a company that specializes in such reports to conduct one for you. That way, you can discover if the data bases of information vendors contain inaccurate information. Consult the Yellow Pages under "Investigators," or use one of the many online search services to find a service.

5. Ask if your former employer has a policy about the release of personnel and/or employment information. Most companies limit the amount of information they disclose.

Remember, potential employers can't conduct a background check without your written authorization. You can "just say no." Of course, doing that would give the impression that you have something to hide and almost certainly eliminate you from consideration.

Just be honest about your background. Many employers will hire good candidates that fit their needs even if their backgrounds are less than perfect -- as long as they didn't lie about it.