Can Background Checks Be Conducted on Independent Contractors?

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Background checks are a crucial part of the hiring process. They’re used to verify the accuracy of an applicant’s resume, query their character, and look for any criminal history. 

However, when it comes to independent contractors, the background check rules can differ. Can a company or an individual conduct a background check on an independent contractor?

Definition

First, it’s essential to understand the definition of an independent contractor. Unlike an employee, an independent contractor is a worker who provides services to a company but is not a salaried staff member. 

They work on a project-by-project basis and are paid for their services as a whole. Independent contractors are responsible for their own taxes and are not entitled to benefits such as health insurance or paid time off.

Background Checks

When it comes to background checks, companies can perform them on employees, but the rules are different for independent contractors. Companies can’t conduct a standard background check on independent contractors because they are not employees. 

A background check typically involves obtaining information from various sources, such as criminal records, credit reports, and employment history, to evaluate an individual’s character, reputation, and fitness for a specific position. 

However, conducting a background check on an independent contractor who is not an employee presents several legal and practical challenges that make it difficult or impossible for a company to perform a traditional background check. If you are unsure of the legality, check with Health Street to see what level of screening you are approved to use.

Why Can’t a Background Check Be Performed?

One of the primary legal issues is the scope of permissible inquiries under federal and state laws. Background checks are regulated by the Fair Credit Reporting Act (FCRA), which imposes strict requirements on employers who conduct background checks on their employees. 

For example, employers must obtain written consent from the employee, provide certain disclosures, and follow specific procedures if they intend to take adverse action based on the background check results.

However, these laws do not apply to independent contractors, as they are not considered employees. This means that a company cannot obtain the same type or amount of information about an independent contractor as it would for an employee without potentially violating privacy laws or other legal requirements.

Additionally, independent contractors are often self-employed and are subject to different reporting and disclosure requirements than employees. This means that a company may have difficulty obtaining accurate or complete information about an independent contractor’s work history, education, or other relevant background information.

Furthermore, independent contractors may work for multiple clients simultaneously, and their privacy rights may be at risk if a company shares their personal information with other parties without their consent.

What Are the Alternatives?

Here are some of the things companies can do to ensure they are working with reputable independent contractors:

Verify Information

Companies can verify the information provided by the independent contractor, including things like checking their education and work history. This activity can help ensure that they’re who they say they are and have the necessary skills and experience.

Ask for References

Companies can ask independent contractors to provide references. A reference check involves contacting the independent contractor’s previous clients or employers to ask about their experience working with the contractor. 

This process can provide valuable insight into the contractor’s work ethic, communication skills, and ability to meet deadlines. The company can then contact these references to ask about their experience working with the contractor.

Don’t Ignore Red Flags

Companies should look for red flags before working with independent contractors. These may come up from performing a reference check. If a company is informed in advance of any red flags, it may want to reconsider working with the contractor.

Protect Sensitive Information

Companies should take steps to protect sensitive data when working with independent contractors. This process includes things like using secure file-sharing platforms and restricting access to non-specific sensitive information.

Do Other Checks Instead

While companies can’t conduct a traditional background check on independent contractors, they can still take steps to protect themselves when working with them. 

By verifying information, checking references, taking into account any red flags, and protecting sensitive information,  companies can ensure that they are working with reputable and qualified independent contractors.

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