An independent contractor is actually a business or person who outsources their need for work or their personal skills, goods, or services through a verbal or written agreement. And according to national statistics, freelance work is at an all-time high with nearly 60 million Americans outsourcing their trade or services in lieu of alternative employment. Hiring outside of your regular staff can be a great option for businesses to get excellent work without the overhead associated with traditional employment. However, you may still need to run an independent contractor background check to ensure they’re up for the task. But can you really run employee background screening on an independent contractor, and what can you legally check?
Independent Contractor Background Check?
Any business worth its salt must perform some type of employee background check on its potential employees, but the employers have to do this by the book. Cutting corners or running checks for the wrong reason can land you in some serious legal hot water. The Fair Credit Reporting Act sets specific rules and regulations for employee background screening. And according to the Federal Trade Commission, independent contractors are covered through those rules in the US. So the easy answer is yes, you can legally perform background checks on all workers as long as you’re doing so for the right reasons. So then, how do you start?
Verify Your State Laws
Many background companies require the employer or hiring manager to comply with specific state laws before performing employee background screening. However, many of those laws pertain specifically to actual employees. Make sure you understand the language used and how it pertains to your hiring needs to ensure you’re not creating an employee relationship with a freelancer or independent contractor.
Check the Wording on Your Federal Forms
Once a self-employed worker makes over $400 in a year’s time, the IRS expects them to pay their own federal taxes. An independent contractor falls within the self-employed guidelines as long as the person hiring that individual for the job in question does not list them as an actual employee on the federal forms required during the hiring process. While you can definitely run a background check to ensure the candidate is right for the job, do not have the contractor sign any documents labeled as “for employment purposes.” Otherwise, the worker could easily claim the employer intended to create a permanent employment relationship.
Confirm the Purpose of the Background Check with the Screening Company
Employee background checks are relatively easy and straightforward. But even though there are limitations to screening options for independent contractors, you can still legally get the info you need. You just need to ensure the screening is in compliance with the Fair Credit Reporting Act regulations. In other words, you can’t run any credit or financial screenings or background checks on non-employees. You can, however, verify their identification, education, and employment history. You can also check their criminal history and whether they’re on sex offender or terrorist watch lists. And if it pertains to the job or tasks in question, an independent contractor background check can also disclose their drinking or drug habits. Of course, if you want to skip all the stress and headaches, you can just give ASG Investigations a call, and we’ll be happy to run your checks for you.