Contractors comprise an ever-growing portion of the US labor market. As many as 10.6 million Americans are independent contractors, according to the latest figures from the US Bureau of Labor Statistics. Other related working arrangements reported include 2.6 million on-call workers, 1.4 million temporary help agency workers, and 933K permanent workers at temporary staffing agencies, for a total sum of around 15 million contract employees.
The rise of the Internet and increasingly mobile lifestyles have affected how new generations view the concept of a job. Meanwhile, employers are in a good position to take advantage of the flexible staffing options in this new era of free-range work. To answer one common question: Yes, you can run a background check on an independent contractor just like you could any other employee. There are even scenarios, such as security clearances or government sub-contracting, where you will be required to do so.
Rights and responsibilities as an employer
One of the important things to know before hiring a contractor is what manner of background checks you’re allowed to make. In the US, hiring procedures are regulated by both the Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) at the federal level. Beyond that, individual states set their own policies on certain aspects of a background screening, with differing rules regarding how far back you’re allowed to check, what information can be released to different tiers of employers, and other details.
You’ll need to check with your local authorities for regional restrictions. The federal guidelines are fairly self-explanatory:
- All candidates must be treated equally
- The candidate must know you are conducting a background check
- You must have the candidate’s written permission on a signed release form
- Avoid the appearance of discrimination based on personal metrics
- Notify the candidate of the results and supply them with a copy
In the case of a rejection based on information obtained in a background check, the candidate has the right to file a dispute with the reporting agency. This can be necessary in the event of errors in the background check.
What to look for in a contractor
Due to the nature of independent contract work, you have a large resource at your disposal in the past clients of the contractor. Contractor reputations are made and broken by “word of mouth,” so checking their past work history is an important first step and one that will tell you the most about how much further you should investigate.
Outside of that, you should consider that a contractor will likely have access to the same level of clearance as any other employee in your organization. So your background check should treat them just as if they were a permanent employee, including the steps of:
- Identity verification
- Education and certification credentials
- Criminal records check
- Credit check
- Driving record, if applicable
- Substance abuse screening
There is a tendency for companies to relax their standards when taking on a contract with an agency, with the assumption that the agency will handle the screening on their end. If you take it for granted that the agency is screening its staff, be sure to have coverage in the contract you sign with the agency. Outline which party is responsible for what terms. Many a liability snare has complicated arrangements involving levels of subcontractors, usually caused by miscommunication such that each party thought the other two were responsible for something.
As stated, the past work record for an individual is a stronger sign than usual. If a person has completed five contracts in a row with companies in the same bracket as you and was given a glowing review each time, that’s a pretty solid “green flag” and the rest of the background check process can be treated as a formality.
For large employers, managing a workforce comprised of workers from several independent contractors can pose unique organizational challenges. In some industries, this is described as the famous idiom “herding cats.” If you find yourself managing several contractor teammates, you might want to take special care to draw up clear procedures for their conduct. Have a designated chain of command, so everybody knows who to go to if they have a problem. You may even want to appoint a special project manager to act as contractor liaison, to keep clear communication channels open and ensure everyone is fulfilling the duties of their agreements unencumbered.