You can avoid the “Hire Then Fire” trap. Check a possible employee before you issue a paycheck.

“A background check can help reduce theft by insuring that the person you want to hire hasn’t committed similar acts in the past,” explained Stephanie Martinez-Kluga, a senior HR specialist at Administaff. “It can also limit exposure due to negligent hiring and help with retention. It is a small price to pay for peace of mind.”

“However, the applicant must complete a consent form,” she said. “If not, it can be considered an invasion of privacy. And there are times where a case of mistaken identity happens. The applicant must be given a copy of the completed report.”

Costs vary from $15 to roughly $50-$100 for a professional pre-employment screening. Most third-party background checks are completed in three to five days via searches of computerized public records and personal databases. Even Notre Dame used a background check when it hired a football coach in 2001: George O'Leary lost the job five days after starting when his background check revealed he lied about his educational credentials.

If you hire an outside company to do a background check on a job applicant or current employee, the FCRA (Fair Credit Reporting Act) requires that you:

•           Get written permission from the individual for the background check.

•           Get permission on a separate document.

•           Get special permission if medical information is requested.

•           Give notice of the individual’s right to ask about the nature and scope of the report if the report will include interviews with others.

•           Give notice and a copy of the report before an adverse employment decision is made.

•           Give notice of rights and procedures to dispute inaccurate or incomplete information

If you are a California employer, and whether you conduct the background check yourself or hire an outside company, you must also:

•           Give notice to the individual of the right to ask for a copy of any background report.

•           Give notice of the right to know the nature and scope of a background check.

•           Give contact information for the screening company.

Small business owners should read the FTC’s final regulations to assess current disposal practices.

Small business owners that are “financial institutions” under the Gramm-Leach-Bliley Act may also be subject to proper disposal requirements under the FTC’s Safeguarding Rule.