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How to Run a Background Check on an Employee (Small Business)

Running an employee background check through a screening company is a short process, but federal law sets the order of the steps. You pick the search, give the person a written notice, get their written permission, and certify to the screening company that you will follow the law. If the report leads you to say no, you send two notices. This guide walks through each step for a small employer, with the federal rule behind it. Pact sells two packages run through Checkr: Standard ($32) and Premium ($70). This is not legal advice.

Updated October 24, 2026 · Checked against the official sources listed at the end

Step 1: Pick the search that fits the job

Start with what the job needs. If a law, a licensing agency, a contract or an insurer tells you what to check, order at least that. If someone names a specific screening company, use that company.

Pact has two packages. Standard ($32) is four database searches: an SSN trace, a national criminal search, a sex offender registry search and a global watchlist search. Premium ($70) adds a county criminal search covering the last 7 years and a FACIS Level 3 healthcare sanctions search. Neither package includes a credit report or a driving record.

Our guides to county vs national criminal searches and to what shows up on an employment background check explain each search in more detail.

Step 2: Give a stand-alone notice and get written permission

Before you get the report, the Fair Credit Reporting Act (FCRA) requires two things (15 U.S.C. 1681b(b)(2)(A)). First, a clear written disclosure that a background report may be obtained, "in a document that consists solely of the disclosure." Second, the person's written authorization. The statute says the authorization may be on the same document as the disclosure.

The EEOC and FTC put it plainly in their joint guide for employers: the notice must be in writing and in a stand-alone format, and it cannot be part of a job application.

In a Pact order, you don't write or collect these forms yourself. Checkr emails the person a secure link. They enter their own details (legal name, date of birth, Social Security number and address history) on Checkr's site and sign the disclosure and authorization there. Nothing runs before they consent.

Orders are taken now and start when Pact's Checkr account opens; Checkr then emails the person.

Step 3: Certify to the screening company

A background check company may give you a report for employment purposes only if you certify certain things to it (15 U.S.C. 1681b(b)(1)). In plain terms, you promise that:

you gave the disclosure and got written permission;
you will follow the adverse action steps if you act on the report; and
you won't use the report in violation of federal or state equal employment opportunity laws.

Step 4: Check your state and city rules

Federal law is the floor. The EEOC and FTC guide says it's a good idea to review the laws of your state and city, because some regulate how background information is used in hiring.

Two examples. In California, an employer with five or more employees may not ask about conviction history until after a conditional job offer (Cal. Gov. Code 12952). In Illinois, it is a civil rights violation for an employer to use an arrest record as a basis to refuse to hire, unless another law allows it (775 ILCS 5/2-103).

Some states also limit what a background check company may report, often to seven years. Our guide to background check lookback limits by state lists the statutes we checked. Pact's state-by-state pages on background check laws are at pactcompliance.com/background-check-laws/.

Step 5: Review the report the same way for everyone

The EEOC enforces federal laws against job discrimination. Its guide with the FTC says to apply the same standards to everyone, whatever their race, national origin, color, sex, religion, disability, genetic information or age.

For criminal records, the EEOC's 2012 guidance names three factors to weigh: the nature and gravity of the offense, the time that has passed since it, and the nature of the job. It also says an arrest alone does not establish that criminal conduct occurred. The guidance does not have the force of law, but it explains how the EEOC looks at these decisions.

Write down your standard before you see any report. Then use it the same way for every person in the same job.

Step 6: Follow the adverse action steps

If something in the report may lead you to not hire, or to fire, the FCRA requires two notices (15 U.S.C. 1681b(b)(3) and 1681m).

Before you decide: give the person a copy of the report and "A Summary of Your Rights Under the Fair Credit Reporting Act." This gives them a chance to explain or fix a mistake.

After you decide: tell them the decision was based on the report, give the name, address and phone number of the company that made the report, say that company didn't make the decision, and tell them they can dispute the report and get a free copy within 60 days. Our FCRA adverse action guide covers the timing and the notices.

Step 7: Keep the records, then dispose of them safely

The EEOC and FTC guide says hiring records, including applications, must be kept for one year after they are made or after a personnel action, whichever is later. Some employers must keep them longer.

When you no longer need a report, the FTC's disposal rule requires reasonable measures to protect it from misuse when you throw it away (16 CFR 682.3). The joint guide gives examples: shred or burn paper, and destroy electronic files so they can't be read or rebuilt.

What a Pact order looks like

Here is the whole process when you order through Pact:

Pay online with secure checkout. Enter the full legal name and email of the person being checked, and name your business as the employer.
Pact sets the check up with Checkr, which emails the person a secure link.
They enter their details and sign the disclosure and authorization on Checkr's site.
Checkr completes the report. It goes to the person and to you.
Some county courts charge a fee to search their records. If a search you order hits one, Pact tells you before adding it.
All sales are final: there are no refunds once you pay.

Common questions

Do I need the person's permission to run a background check?

Yes, when you use a background check company. The FCRA requires a written disclosure and the person's written authorization before the report is obtained (15 U.S.C. 1681b(b)(2)).

Can the consent go in my job application?

No. The disclosure must be in a document that consists solely of the disclosure. The EEOC and FTC guide says it can't be in an employment application.

What if the person won't give consent?

Then the check can't run. An FTC staff report says the FCRA does not prohibit adverse action against someone who refuses to authorize a report, but it does not specifically authorize it either. Ask your attorney.

Can I turn someone down because of an arrest?

The EEOC says an exclusion based on an arrest, in itself, is not job related and consistent with business necessity. Some states, like Illinois, bar using arrest records in hiring. You may look at the conduct behind an arrest in some cases. Talk to your attorney.

When in the hiring process can I run the check?

Federal law doesn't set a time. Some states and cities do. For example, California employers with five or more employees can't ask about conviction history until after a conditional offer.

How much does a background check cost through Pact?

Standard is $32 and Premium is $70. Some county courts add a fee, and Pact tells you before adding it. All sales are final.