The Difference Between Level 1 and Level 2 Background Checks

When an organization begins looking at potential candidates for hire, a single bad hire can cause a significant impact. Occupational fraud can take 5% off an organization’s annual revenue, and in an effort to try and earn employer approval, many candidates stretch the information on their application. Organizations can combat and eliminate this fraud through comprehensive background checks.

The Difference Between Level 1 and Level 2 Background Checks

Different Types of Background Checks

Background checks are a step that a majority of employers are taking during the pre-employment screening process. Background checks are a comprehensive way of ensuring that an applicant is who they say they are – often verifying the information an applicant provides in terms of criminal history, education, work history, and other areas of their past that may be relevant to the position they have applied for.

There are state and federal regulations that organizations must adhere to when conducting these checks. Most background checks for employment fall in level 1 to level 4 categories and can be leveraged based on the employer’s needs.

Four Levels of Background Checks

Background checks are not a one-size-fits-all solution for an organization. That is why they come in different levels – each offering a different level of search based on the employer’s needs. Each approach was designed to provide the right amount of information for employers to gain the insight necessary to make the right decisions when hiring new employees.

  • Level 1: A name-based background check covers only one jurisdiction – the area in which the subject lives. This is a less restrictive screening process and includes employment history verification.
  • Level 2: A state and national jurisdictional screening is performed to disqualify crimes. Potential employees holding positions of responsibility often undergo these types of background checks.
  • Level 3: This is one of the most common types of background checks – these include criminal history, education, previous employment history, and reference checks. It may also include pre-employment drug screenings.
  • Level 4: These are considered “executive” background checks and are similar to level three checks but include federal criminal searches, national bankruptcy, and media searches.

Level 1 and Level 2 for Employment

Levels 1 and 2 background checks are the most commonly used checks when employers screen potential applicants. Level 1 only screens public and local criminal records – it may be even more limited based on the individual running the background check. The first level only touches on the employment history area of the subject’s background, but it does not dive into credit reports, criminal charges, or tenant background checks.

Level 2 goes one step further than the basic level 1 background check. It will include the information you would uncover in the level 1 background check but in further depth. This background check will require the consent of the applicant and their fingerprints. Considered a comprehensive background check, it includes national records, too.

Benefits of Pre-Employment Background Checks

Employers who perform background checks for pre-employment applicants have a lot to gain for their organization. When the prospect of a background check is involved in the pre-screening process, it often deters those applicants with less than favorable histories.

These background checks can lead to:

  • Fewer discrepancies in job applications
  • Fewer applicants who are trying to hide serious issues because they are more discouraged to hide or lie on their applications
  • An increase in qualified employees who are looking for a safe place for employment
  • Better candidates in the applicant pool

Performing background checks help organizations protect themselves from negligent hiring and retention liability. There are certain aspects of an employee’s life (and history) that an employer is responsible for knowing (or not knowing). Organizations can be held responsible for their knowledge of an employee because of their legal and moral obligations to guarantee a safe work environment – which also requires disclosing if the job applicant has a criminal or illegal history.

Organizations that implement background checks benefit from reducing losses associated with the dishonesty or past behaviors of employees. Using the data collected, an organization can avoid future liability by hiring outside these patterns. Recent studies have shown that after making a bad hire, it can cost the organization five times the employee’s monthly salary to rectify that mistake. This can be a terrible detriment to the organization.

Boost Your Ethical Obligation with Background Checks

Organizations have an ethical obligation to the employees that they employ. These obligations require you to ensure that you have the proper plan in place should compliance issues arise with existing employees. The background check pre-screening process is a means by which organizations can eliminate potential ethical liabilities by eliminating bad hires.

Implementing the proper background checks into the pre-application process can help save your organization money in the long run and is becoming a widely accepted practice. Although most level 1 background checks should be sufficient enough to provide you insight into your applicant, it may become necessary to use level 2 background checks to ensure that instead of only depending on local information, the national bases are covered as well. These are the steps you will need to ensure that you have taken the proper precautions in the hiring process.

Giovanni Gallo

Giovanni Gallo is the Co-CEO and Chief Development Officer of ComplianceLine, the industry leading compliance solutions provider. Gallo’s extensive experience working in startups and advising multinational companies on strategic growth has given him a unique perspective on the relationship between a properly executed compliance function and an organization’s success. He enjoys using the passion and care of his family business roots to help employees thrive in the workplace.

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