The risks in hiring new employees

Hiring new employees can be risky business for a small business owner. After spending a great deal of money and years building a business, it can all be damaged or lost in an instant with the wrong actions of an employee. By taking the time to fully investigate the background of a potential new hire, you'll be better able to know whom you're hiring and save the business's reputation and thousands of dollars.

"Background, reference and criminal history checks are vital steps before introducing any new individual to the inner workings of your business," says Bryant Garcia, manager of Fiducial Recruiting Services. "From an initial interview, you just don't know who you're dealing with. Industry reports tell us that 30 percent to 40 percent percent of resumes are embellished or completely false. The chances are pretty good that you'll run across a few false resumes in your interviewing process and even greater that you might hire one of those applicants unless you are proactive in your pre-employment screenings."

At the cost of about $100, complete employment history, references (actually speaking to previous employers), criminal background checks, and licensing and certification verification can be performed. At such a reasonable cost, it makes good business sense to take those steps prior to bring on a new employee. Remember that extensive searching on every candidate isn't necessary. Do the full check only on those two or three final candidates that you wish to know better.

"Another key area to review is to actually verify salary history," Garcia says. "Salaries are a bit tricky to verify because most individuals inflate this number during interviews because they, of course, want to make more money. Try requesting contacts at the applicant's previous employment and ask questions like, 'Can you provide me with a salary range that this employee was paid?' when you make the call. By verifying salary, you're also assuring that you're not overcompensating or paying the candidate for a position they're not truly experienced to fill."

Performing a Social Security check provides every single locality the prospective employee has lived in the last seven years. A criminal background check enables you to search based on convictions only. By law convictions are the only area that can be investigated because they are the legal basis to not hire an individual.

The risks in hiring new employees
Download File | Visit Archives

Brought to you by:

Since the late 1960s to early 1970s, hostile workplace events such as shootings have prompted the need for interviewing vigilance. Add that to the increasing prevalence of workplace theft and there's been a tremendous push to do complete background checks, drug testing, criminal checking, and physicals. With the ever-rising cost of offering health insurance benefits, employers are finding it necessary to perform pre-employment physicals as well.

"There's a great deal more testing to be done before an employee is hired," Garcia says. "Pre-employment physicals can help to weed out the risk of higher insurance rates, due to chronic illness or injury (like a back injury) especially if the company is self-insured. The physicals can also catch habitual drug and alcohol users that may appear clean at an interview."

Every business, no matter what their size, is required to have a completed I-9 form on file for each individual they employ. The I-9 is an additional confirmation of the candidate's residency and authorization to work in the U.S. The individual is required to provide two forms of identification which can include a birth certificate, a valid visa, valid state driver's license, or Social Security card. Each of these forms of identification can provide an employer with another piece of the candidate's history and additional checks in the identity verification process.

An employer cannot discriminate against a person based on disability, however, an applicant can be turned away if they cannot adequately perform the duties outlined in the job description due to physical limitations. For positions requiring heavy lifting or repetitive motions or any other type of physical expertise, it's essential that the limitations be identified before the employee is hired.

You can read more information on ways to hire the right individual and steps you can take to protect yourself and your business.

You may like these other stories...

Senate Takes Different Approach from House for Highway and Bridge FundEarlier this week, according to a New York Times article, the Senate agreed to fill the coffers of the fund that pays for highway and bridge repairs with...
It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing...
Inversions: Loophole Is the ProblemJacob J. Lew, the U.S. Treasury Secretary, published an opinion piece in the Wall Street Journal that "the system has become full of inefficiencies and special-interest loopholes. That...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.