Contractor Background Check: What You Need to Know

Cindy Ellis - September 1, 2023

The process of hiring a contractor to help with your business is stressful, and it may be hard to select the best contractor for your needs. This process is made more anxiety-inducing by the fact that your contractor will likely have access to highly sensitive information, such as client details, banking information, or other essentials that help your business run. To help put your mind at ease and ensure you find the best contractor for your needs, conducting a contractor background check is often helpful.

Our article gives you essential information about independent contractors, why you should consider background checking these individuals, and important items to keep in mind as you develop your contractor background check guidelines.

What Are Independent Contractors?

Independent contractors are individuals who work on a freelance or contracting basis, often providing their expertise for essential items that keep your business running and growing. Independent contractors are found in virtually all fields of employment, and these individuals generally pride themselves on being able to offer expert knowledge and help their clients succeed with their business or operational goals.

If you are looking for an expert to consult, you need temporary help with one aspect of your business, or you need longer-term assistance with an ongoing project, there is likely an independent contractor out there that is a perfect fit for your needs.

Why Should I Background Check Contractors?

Employers and employees alike often become stressed at the idea of background checks, but these reports are an important part of keeping your workplace safe and productive. With the assistance of a background check, you can ensure that a contractor is the right fit for your workplace and will produce the quality of work that you require.

Important reasons to conduct contractor background checks include:

• Ensuring that your contractor is truthful about their identity
• Making sure your contractor doesn’t have anything on their record that would interfere with their employment
• Verifying educational history, certifications, and professional licensing
• Ensuring your contractor doesn’t have a serious criminal record or any legal issues that would put other employees or your workplace at risk
• Making sure your contractor is able to conduct their job as defined in the hiring process

You can also take some time to evaluate your contractor’s online presence, screening them and their eligibility for a position at your company. Items to review to ensure your contractor is the right fit include:

• Your contractor’s website or portfolio page, if they have one
• Reviews of your contractor
• References your contractor provides
• General professionalism of your contractor

Keep in mind that you are not legally allowed to make hiring decisions based on anything you find out about your contractor in regard to race, religion, gender, or sexual orientation – this is discriminatory and a violation of equal employment laws.

Instead, gauge your contractor’s background information in terms of reviews, feedback from previous clients, and examples of their work, all things that are much more important to your hiring decision.

Important Considerations for Contractor Background Checks

The following considerations are important to keep in mind as you decide how to carry out background checks for any of the independent contractors you are working with.

State and Federal Regulations

Both state and federal regulations limit how background checks are conducted, and the Fair Credit Reporting Act (FCRA) is the main piece of federal legislation that governs how background checks are conducted on employees. Under the Federal Trade Commission’s guidance, independent contractors are protected by the FCRA and, therefore, eligible to have a background check conducted on them.

State regulations may vary based on what is allowed to be disclosed on a background check report, and it’s important to keep both state and federal regulations in mind as you work to develop guidelines for employee background checks, including contractor background checks.

More information on the FRCA and its effect on background check regulations can be found here.

Background Check Consent

In most jurisdictions, consent and awareness of the background check being conducted are typically essential. This means that you will need to put details in your job application or make it otherwise clear during the hiring process that if given an offer of employment, the contractor will need to agree to a background check.

Both you and the contractor will need to sign off on this, as obtaining consent for the background check and informing the individual about which parts of their background you will be reviewing is a key part of federal background check regulations. Don’t skip this step, or you could land yourself in legal trouble.

Drug Testing Consent

If you are planning on requesting a drug test alongside a background check, as many employers do, you will also need to make this clear during the hiring process for your contractors. Ensure that you state that offers of employment are contingent on passing the drug test and background check or another similar statement. This allows contractors who aren’t willing to submit a drug test to stop proceeding through the hiring process, allowing you to turn your attention to a different eligible candidate.

What If a Contractor Fails a Background Check?

If a contractor you are planning on hiring fails a background check, then you will need to investigate what exactly is raising the red flag. In many cases, you might be able to overlook certain items on a background check if it doesn’t apply to the nature of the work your contractor is doing, such as a minor traffic infraction for an individual working an office job, but sometimes you may need to review more serious items, such as criminal convictions or outstanding court cases.

Make sure that when organizing the background check for your contractor that you include information about what actions will be taken if a background check is failed, such as an offer being rescinded. Including this will ensure you and your contractor are on the same page as the background check is conducted.

Keeping Your Business Running Smoothly

When it comes to running your business and hiring employees, it’s important to put your trust in individuals who can complete the job they are hired to do and don’t pose a threat to the workplace. Independent contractors are a major part of helping most businesses thrive and grow, but if you accidentally hire the wrong person for your workplace, you may be dealing with issues.

Conduct contractor background checks where possible, making sure to follow all state and federal regulations, and take the time to vet your contracting employees so that your business runs as smoothly as possible.