Employment background checks are becoming increasingly common these days. The reasons for this include the fact that negligent hiring lawsuits that result from the actions of an errant employee can damage a company's credibility and lead to hefty fines; companies have become more selective in their choice of employees following the threat of terrorist activities; accepting a resume at face value has resulted in many companies wasting time and money due to frequent hire-and-fire situations. Also, more companies are now conducting employee background checks as information from databases all over the world is available online. Employers are not bound to conduct an employment background check in all cases; however, federal and state laws make employment background checks compulsory for jobs that require interacting with children, the infirm, and the aged.

Information that can be included in an employment background check includes driving records, details of past employments, criminal records, military records, educational records, character references, and drug test records. However, background check companies that provide information to employers have to abide by the Fair Credit Reporting Act (FCRA) which regulates the type and amount of information that an external agency can provide to an employer. Bankruptcies that are more than 10 years old as well as civil suits and records of arrest more than seven years old cannot be reported. FCRA regulations vary with the state and agencies that carry out a pre-employment background check need to ensure that they comply with the state regulations.

Employment background checks can be conducted by companies in-house or can be outsourced to third parties that may include private investigators, H.R firms that screen applicants, and data brokers who are established online. Outsourcing an employment background check has its advantages but if a third-party is conducting a background check, consent from the applicant is required and under FCRA regulations the applicant should be provided with a copy of the investigations. If the employment background check is conducted in-house, the employer is not bound to obtain the applicant's consent or apprise him in detail of the reason for rejecting his application.