Updated Apr 3, 2022 - Economy

Employers revamp background checks to help fight labor shortage

A person wearing a suit holds a small magnifying glass

Illustration: Aïda Amer/Axios

Facing a tight labor market, some big employers are revamping the way they conduct background checks on prospective employees, executives from screening companies said.

Driving the news: Typically, employers will conduct a seven-year look-back into an applicant's background — but now some are switching to a one-year look, said Ranjeev Teelock, chief product officer at First Advantage, which conducts checks for employers.

Why it matters: Market forces may be prompting employers to do what civil rights advocates have wanted for years. They've long argued that background checks screen out perfectly good candidates with records that are long behind them.

  • Widening the pool of potential employees helps address the ongoing labor shortage — and could also help employers keep a lid on wage growth.

State of play: "Suddenly employers are faced with a choice of raising wages to attract workers or attempting to increase hiring of people with records to keep wages low," said Beth Avery, a senior staff attorney at the National Employment Law Project.

  • "I hope [the] changes ... are sticky, and continue even after the tight labor market is not as tight," she said.

What to watch: Instead of long look-backs, employers are doing something called "continuous monitoring," regularly checking court records to see if workers were arrested or charged with new infractions, said Teelock.

  • Over the past year, there's been a 12% increase in the number of workers who are being continuously monitored, according to Appriss Insights, which works with companies on these checks.
  • This comes with some major pitfalls, Avery noted. Black Americans tend to be more harshly treated by police and the courts, so if employers are getting flagged when someone is arrested or charged, it could have a disproportionate effect on them, she said.

Editor's note: This story originally published on March 28.

Go deeper