In today's rapidly evolving gig economy, hiring practices have dramatically changed. The surge in freelance work has opened up opportunities for businesses to tap into a diverse pool of skilled professionals. However, with this flexibility comes risk, particularly when ensuring that freelancers are who they claim to be.
While most employers use background-checking services for their full-time and hourly employees, many employers fail to carry this important practice over to their contingent workforce. This can open up employers to risks they wouldn't usually take with their in-house employees. However, a simple background check such as reference or employment verification can potentially save employers time and money if things go sour with a freelance employee.
This blog post will guide you through the key reasons for implementing background checks on freelancers, exploring legal considerations and the types of checks available.
The Importance of A Background Check for Freelancers
The gig economy is thriving, and with that growth comes the challenge of verifying a freelancer's professional and personal history. Many employers overlook freelancer background checks, assuming they are less critical than full-time employees. However, neglecting this step can introduce significant risks.
Many of the reasons for screening contingent workers are the same for full-time employees. While freelancers may work remotely, they may still have access to sensitive company information, maintain access to your office, or work closely with your employees. This exposes companies to the same liabilities as failing to screen full-time employees. Background checks allow you to mitigate these risks by verifying their previous employment information, education, and credentials, ultimately safeguarding your business.
“In a fast-growing gig economy, companies often focus on agility and speed,” explains Chandra Kill, CEO of KRESS Inc. “But skipping background checks for freelancers can undermine long-term security and lead to unnecessary vulnerabilities.”
Supporting a Safe Work Environment
Background checks safeguard your business and ensure a safe workplace. By thoroughly screening freelancers, you can spot potential risks early. This proactive safety measure fosters a positive work culture and enhances well-being.
“It’s not just about checking for red flags,” Chandra adds. “It’s about creating a secure and welcoming work environment where everyone—from full-time staff to freelancers—knows that their safety and well-being are a priority.”
Liability and Risk Mitigation
Failing to conduct independent contractor background checks can lead to severe consequences. Businesses may face legal liabilities if a freelancer turns out to have a problematic history that could have been discovered through a simple check. By proactively conducting these checks, you not only protect your business but also foster a culture of trust and safety within your team.
“The biggest risk comes from the unknown,” says Chandra. “Taking a small step to verify credentials can protect your organisation from costly mistakes down the line, particularly in industries where trust is critical.”
Protecting Sensitive Data
Many freelancers have access to sensitive company data. This could be as simple as a single spreadsheet or as sensitive as access to the company server. A background check will give you peace of mind that whoever you hire will maintain your company's privacy and remain a valuable asset. Additionally, it helps verify previous employment information, ensuring the freelancer's credibility and protecting your resources.
“In an age where data breaches and cybersecurity risks are top concerns, the individuals with access to your data must be vetted thoroughly,” Chandra explains. “A background check doesn’t just verify skills—it reassures you that your most sensitive information is in responsible hands.”
Ensuring Reliability and Trustworthiness
Background checks provide peace of mind by confirming that freelancers are reliable and trustworthy. They offer insights into a freelancer's character, work ethic, and past behaviors. Whether it's a criminal, employment, or education verification, these checks help paint a clearer picture of the individual you're bringing into your business environment. Essentially, they serve as a first line of defense against potential issues arising from uninformed hiring decisions.
“Freelancers can become long-term partners,” notes Chandra. “Establishing that relationship on a foundation of trust is key to their success within your business. A background check is often the first step in building that mutual respect.”
Building a Strong Reputation
In today's digital age, reputation is everything. Businesses must prioritize their brand image and protect it at all costs. Performing background checks on freelancers not only protects your business but also helps build a strong reputation for being proactive and responsible. This can positively impact how clients perceive your company and increase trust in your services.
What to Expect from a Freelancer Background Check
A background check is an investigation into an individual's past, designed to verify the accuracy of the information provided by job applicants. For small business owners, understanding what to expect from a background check can help streamline the hiring process and ensure that you bring trustworthy freelancers into your team.
Background checks come in various forms, each serving a specific purpose in the hiring process. Here's a breakdown of the key components involved:
Criminal Background Checks: These checks reveal any criminal records that could pose a risk to your business. While not all freelancers will require this level of scrutiny, it's crucial for roles involving sensitive data or financial responsibilities.
Employment Verification: This type ensures that a freelancer's work history matches what they've claimed on their resume. It verifies previous employment information and confirms job titles, responsibilities, and dates of employment.
Education Verification: For roles that require specific qualifications, education verification checks the accuracy of a freelancer's educational background. This step ensures that their credentials align with the requirements of the job.
Credit Checks: For roles involving financial responsibilities, a credit history report can be an essential step in the background check process. This type reveals a freelancer's credit history, including any outstanding debts or bankruptcy filings.
Social Media Screening: With the rise of social media use, many companies are now incorporating social media screening as part of their vetting process. This type provides a glimpse into a freelancer's online presence and activities, highlighting any red flags that may not be discovered during other types of background checks.
“Each type of background check serves a unique purpose,” Chandra explains. “The key is tailoring your screening process to the specific role and level of access that freelancer will have. Not all positions require the same level of scrutiny, but every hire deserves some level of verification.”
Legal Complexity
When conducting background checks on freelancers and independent contractors, it's important to be aware of the evolving legal landscape. The Fair Credit Reporting Act (FCRA) stands as the primary legislation overseeing background checks, though its full applicability to freelancers remains unclear. Court rulings indicate that the FCRA's provisions for "employment purposes" do not extend to independent contractors. Yet, the Federal Trade Commission (FTC) contends that protection under the FCRA should cover both employees and nontraditional workers.
To complicate matters, notable rulings have been made that highlight potential violations. For instance, one federal district court ruled that using the "employment purpose" provision for conducting background checks on contractors is a "willful violation" of FCRA.
In light of this, businesses should adopt a cautious approach and consider taking expert advice. Companies should also craft a clear vendor policy detailing the rationale for needing a background check and remain vigilant of any legal developments affecting their hiring processes.
“Legal clarity around background checks for freelancers is still evolving,” Chandra says. “Employers need to keep their policies flexible and aligned with current rulings to avoid compliance issues.”
Best Practices For Conducting Background Checks on Freelancers
Starting out with background checks may seem daunting, but it becomes a straightforward process with the right approach. Here's a quick step-by-step guide to implement these checks seamlessly.
Review Policies: Make sure your policies align with current legal requirements and industry best practices. Having a clear policy in place helps create consistency and ensures that all candidates are treated fairly.
Define the Scope: Start by identifying the specific pre-employment background checks relevant to the role you're hiring for. Consider factors such as the nature of the work, access to sensitive information, and legal requirements.
Choose a Reliable Service: Numerous online platforms and services offer background check solutions. Research and select a reputable provider that aligns with your needs. Look for one that provides comprehensive reports, quick turnaround times, and excellent customer support.
Obtain Written Consent: This means obtaining written consent from the freelancer before conducting any background checks. This step is essential for compliance with legal regulations and demonstrates transparency.
Conduct the Checks: Once consent is obtained, initiate the background checks through your chosen service. Be sure to review the results thoroughly and address any discrepancies or concerns.
Keep Records Confidential: Maintain the confidentiality and security of background check records to protect the individual's privacy. Ensure that only authorized personnel have access to this sensitive information.
Communicate the Findings: If the checks reveal any red flags, consider discussing them with the freelancer. Provide an opportunity for clarification or explanation before making a final decision.
“Transparency is key,” advises Chandra. “By communicating clearly with freelancers and obtaining their consent, you maintain trust while adhering to legal requirements. This ensures a smooth process for both sides.”
Conclusion
Conducting background checks on freelancers benefits both parties, but businesses must navigate the legal landscape carefully. For freelancers, an employment background check signals professionalism and credibility, enhancing transparency and trust with clients. Those who participate are more likely to be chosen for high-profile projects and long-term collaborations.
For employers, background checks offer peace of mind by ensuring freelancers have the necessary qualifications and experience, reducing the risk of hiring underqualified individuals. Verifying credentials helps create a safe and productive work environment and fosters a positive company culture. Knowing coworkers are vetted builds trust, enhancing collaboration and teamwork.
“As freelancing becomes an integral part of the workforce, businesses need to view background checks as an essential part of building strong, lasting partnerships,” concludes Chandra.
With 30+ years in background screening, KRESS Inc. provides customizable solutions for businesses of any size. Our expert team helps you navigate legal complexities, ensuring compliance and reducing risk. Contact us to learn how we can support your freelance hiring process and contribute to a safer, more productive work environment.