Background Check Policy: Free Template for Small Businesses
Quick Answer
A background check policy explains which checks your business runs, for which jobs, when in the hiring process and how results are used. If you use a background check company, the FTC says you must give the applicant a written disclosure in a stand-alone format, get written permission, give a pre-adverse action notice with a copy of the report and a summary of rights before rejecting someone based on the report and then give an adverse action notice. Apply the same standards to everyone, follow state and local rules and store reports securely.
Background checks help you hire safely, especially for jobs involving money, driving, customers' homes or vulnerable people. But they come with legal requirements, and handling them inconsistently can create risk. A written background check policy keeps your process fair, consistent and compliant.
This guide includes a free background check policy template and explains which checks to run, when to run them, what federal rules require and how to handle results.
Note: This is general information, not legal advice. Background checks are regulated by federal, state and local laws. Talk to an employment attorney and your background check provider before setting your policy.
Types of Background Checks
| Check | What it shows | Common for |
|---|---|---|
| Criminal history | Convictions and sometimes pending cases | Many roles, especially with money or access |
| Driving record | License status, violations | Drivers and vehicle use |
| Employment verification | Past employers, dates, titles | Most roles |
| Education verification | Degrees and certifications | Roles requiring credentials |
| Professional licenses | License status | Licensed trades, healthcare |
| Credit history | Credit report | Some financial roles; restricted in some states |
| Drug testing | Drug screening results | Safety-sensitive roles; rules vary by state |
Only run checks that are relevant to the job. A driving record makes sense for a delivery driver, not a bookkeeper who never drives for work.
Free Background Check Policy Template
[Company Name] Background Check Policy
Purpose: [Company] conducts background checks to help ensure a safe workplace and protect customers, employees and company property.
Positions covered: [All positions / Positions involving cash handling, driving, access to customer homes or sensitive information.]
Types of checks: [Criminal history, driving record for driving positions, employment verification, license verification.]
Timing: Background checks are conducted after a conditional job offer [or: at the stage allowed by state and local law].
Disclosure and authorization: Applicants receive a written disclosure and must give written authorization before a background check is conducted through a background check company.
Use of results: Results are reviewed individually, considering the nature of any offense, how long ago it occurred and its relevance to the job, as allowed by law.
Adverse action: Before making a decision based on a background check report, [Company] will provide a pre-adverse action notice, a copy of the report and a summary of rights, and give the applicant an opportunity to respond. Final decisions will be communicated with an adverse action notice.
Consistency: Checks are applied consistently to all candidates for the same position.
Confidentiality: Reports are stored securely, separate from personnel files, with access limited to [HR/owner].
Have an attorney review and adapt the policy for your state and city.
What the FTC Says Employers Must Do
When you use a company that is in the business of compiling background information, such as a background check provider, the Fair Credit Reporting Act applies. The FTC's guidance for employers explains these steps:
Before Getting a Report
- Disclosure: tell the applicant or employee you might use the information for decisions about their employment. The FTC says this notice must be in writing and in a stand-alone format, and it can't be in an employment application.
- Permission: get the person's written permission before running the check.
- Certification: certify to the background check company that you notified the person and got permission, that you complied with FCRA requirements and that you won't discriminate or misuse the information.
Before Taking Adverse Action
If you might not hire, or might take other adverse action, based on the report, the FTC says you must give the person a notice that includes a copy of the report you relied on and a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act."
After Taking Adverse Action
The FTC says you must tell the person they were rejected because of information in the report, give the name, address and phone number of the company that sold the report, say that the company didn't make the decision and can't explain it, and tell them they have the right to dispute the accuracy or completeness of the report and to get an additional free report from the company within 60 days.
Treating Applicants Equally
The FTC's guidance also reminds employers to apply the same standards to everyone, regardless of race, national origin, color, sex, religion or other protected characteristics, and that background information from any source must not be used to discriminate. Policies that screen people out based on background information can have a disparate impact, and the guidance says such policies should be job related and consistent with business necessity.
- Run the same checks for everyone applying for the same job.
- Look at each result individually instead of using blanket bans.
- Consider the nature of the offense, how long ago it happened and how it relates to the job.
- Give applicants a chance to explain or correct information.
State and Local Rules
Many states and cities have additional rules, often called "ban the box" or fair chance laws. They may:
- Prohibit criminal history questions on job applications.
- Require waiting until after a conditional offer to run a check.
- Limit how far back you can look or which records you can consider.
- Require an individualized assessment and extra notices.
- Restrict credit checks for most jobs.
- Set rules for drug testing, including cannabis.
Check the rules for every state and city where you hire. See the job application form and illegal questions to avoid during reference checks.
Step-by-Step Background Check Process
- Decide which checks apply to the position.
- Make a conditional offer, if your policy or local law requires checks after an offer. See the job offer letter template.
- Give the stand-alone disclosure and get written authorization.
- Order the check from a reputable provider and certify compliance.
- Review results individually and consistently.
- If considering adverse action, send the pre-adverse action notice, report copy and summary of rights, and wait a reasonable time for a response.
- Make the final decision and send the adverse action notice if needed.
- Store records securely.
Choosing a Background Check Provider
- Experience with small businesses and your industry.
- Help with disclosure, authorization and adverse action forms.
- Clear turnaround times and pricing.
- Accurate, up-to-date data sources.
- A dispute process for applicants.
- Secure online access to reports.
Storing Background Check Reports
Background check reports contain sensitive personal information. Store them separately from regular personnel files, limit access to the people who make hiring decisions and securely destroy them when you no longer need them. Ask your attorney how long to keep reports under the laws that apply to you.
Background Checks for Current Employees
Some businesses run checks when employees move into new roles, such as a promotion to a cash-handling or driving position, or periodically for licensed or safety-sensitive jobs. The same disclosure, authorization and adverse action steps apply when you use a background check company for current employees.
Example: A Home Services Company
A home cleaning company ran background checks only when a manager felt unsure about a candidate. When one applicant complained about being treated differently, the owner realized the process was inconsistent. She created a written policy: every cleaner entering customers' homes received the same check after a conditional offer, with stand-alone disclosures and a clear adverse action process. Hiring became more consistent, and customers appreciated knowing every cleaner was screened.
Common Background Check Mistakes
- Putting the disclosure inside the application.
- Running checks on some applicants but not others for the same job.
- Skipping the pre-adverse action notice.
- Blanket bans on any criminal record.
- Ignoring state and local rules.
- Storing reports in general personnel files.
Background Check Checklist
| Step | Done? |
|---|---|
| Write a background check policy | |
| Match checks to job duties | |
| Check state and local rules | |
| Use a stand-alone disclosure and get written permission | |
| Review results individually and consistently | |
| Follow pre-adverse and adverse action steps | |
| Store reports securely |
Sample Disclosure Notice
Disclosure Regarding Background Investigation
[Company] may obtain information about you from a third-party consumer reporting agency for employment purposes. This may include [types of information]. This information may be used in decisions about your employment.
This disclosure must be provided as a separate document, not part of the job application. Have your background check provider and attorney review the exact wording and any required state notices.
Sample Authorization
I authorize [Company] to obtain a consumer report about me from [background check company] for employment purposes.
Name: __________ | Signature: __________ | Date: ______
Many background check providers supply compliant disclosure and authorization forms. Use theirs or have yours reviewed.
Individualized Assessment
When a background check shows a criminal record, many employers review it individually, considering:
| Factor | Questions |
|---|---|
| Nature of the offense | Does it relate to the duties of this job? |
| Time passed | How long ago did it happen? |
| Nature of the job | Does the job involve money, driving, vulnerable people or security? |
| Applicant's explanation | Is there context, rehabilitation or an error in the report? |
Document your reasoning. Some state and local laws require specific assessment steps and forms.
Waiting Period After Pre-Adverse Action
After sending a pre-adverse action notice, give the applicant a reasonable amount of time to review the report and respond before making a final decision. Many employers wait at least several business days. Some state and local laws set specific waiting periods. Check with your provider and attorney.
Background Check Tracker
| Candidate | Position | Disclosure given | Authorization signed | Ordered | Received | Result | Pre-adverse sent | Final decision |
|---|---|---|---|---|---|---|---|---|
| ☐ | ☐ | |||||||
| ☐ | ☐ |
A tracker shows each step was completed in order, which helps if your process is ever questioned.
Communicating With Candidates
Sample: "Congratulations on the conditional offer! As explained in the offer, it's contingent on a background check. You'll receive a separate disclosure and authorization form from [provider]. Once it's complete, results usually take [timeframe]. We'll let you know as soon as we hear back."
Background Check Quick Tips
- Use a stand-alone disclosure.
- Get written permission.
- Run the same checks for the same job.
- Review results individually.
- Follow every adverse action step.
Driving Record Checks
For jobs that involve driving, a motor vehicle record check shows license status and violations. Decide in advance what driving record standards apply to the job, such as no license suspensions or a limit on recent violations, and apply them consistently. Talk to your insurance agent, since your auto insurer may have requirements for drivers. See the vehicle inspection checklist for other driver safety routines.
Employment and Reference Verification
Verifying past employment confirms that the applicant's work history is accurate. Many former employers only confirm dates and titles. Ask applicants for permission to contact references, and use consistent questions. See illegal questions to avoid during reference checks.
Getting Started This Week
- List your positions and decide which checks each needs.
- Choose a background check provider.
- Get disclosure, authorization and adverse action forms from your provider.
- Check state and local rules with your attorney.
- Write and share your policy with hiring managers.
Common Questions About Background Checks
- Can I run a check before an interview? Some state and local laws limit timing; many employers wait until after a conditional offer.
- Do I need consent for a social media search? Searching on your own is different from using a background check company, but it carries its own risks. Talk to an attorney before using social media in hiring.
- Can I check current employees? Yes, following the same disclosure and authorization steps when using a background check company.
- What if the report is wrong? The applicant can dispute it with the background check company; give them time to do so.
Reviewing Your Policy
Background check laws change, especially at the state and city level. Review your policy and forms at least once a year with your provider and attorney, and whenever you start hiring in a new location.
Background Checks for Contractors and Vendors
Some businesses ask vendors and subcontractors who work in customers' homes or sensitive areas to confirm their workers have been screened. Put this requirement in your vendor agreement and ask vendors to confirm compliance, rather than running checks on another company's employees yourself. See the vendor list template.
A Fair Process Builds Trust
Candidates notice when a hiring process is clear and fair. Explaining checks up front, giving people a chance to respond and making decisions consistently protects your business and helps you hire good people who might otherwise be screened out unfairly.
Keep the policy short, share it with every hiring manager and use it the same way every time.
Keeping Hiring Managers Consistent
Train every hiring manager on the policy: which checks apply to which roles, when to order them, how to handle results and who makes final decisions. Many businesses route all background check decisions through one person, such as the owner or HR, so results are reviewed the same way every time.
Hire Consistently With Updoot
Updoot's applicant tracking keeps every candidate moving through the same steps, and hiring and onboarding tools track offers, documents and start dates.