An employer who hires an employee with a criminal record or a history of violence is in trouble. Employees of the company can sue the company for "negligent hiring" practices. This could be very costly for the company.

Apart from the costs involved in hiring and training the employee, employers may also lose a lot of money in law suites filled by other employees of the company. Given past history, the average cost to employers in "negligent hire" lawsuits is around $ 3 billion.

It is to avoid such costs that both large and small businesses are spending time and effort in pre employment screenings. These days most large companies utilize the services of an employment screening company for this task.

A lot of large companies are also buying the software required to conduct these complete background checks. This way, human resources personnel can establish their own criteria for applicant screening.

All employers need to work within State and Federal regulations imposed on applicant screening. In general the employer conducting a background check into an applicant should only access information that is pertinent to the job.

Under federal law and some state laws, educational records including transcripts, recommendations, and financial information are confidential. So employers conducting background checks cannot access this information or use it as part o the job screening process.

However, there are certain industries for which applicant screening as well as background checks are mandated. For example businesses employing commercial drivers are mandated by law to conduct drug screening. Similarly, businesses in securities and casinos need to conduct criminal background checks on all their employees.

An employer who is handling the applicant screening process by himself/herself needs to be aware of all the state and federal regulations. If an employer is employing candidates on a national basis, than the employer needs to be aware of regulations of all 51 states.

In addition, if an employer intends to deny employment based upon information in the report, the applicant has to receive a copy of the report and a notice of legal rights. If the applicant believes that the report created by the employment screening service is inaccurate, the agency has 30 days within which verify the information. Applicants have the right to inspect their files.

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