Hiring an employee is one of the most crucial jobs in any organization. A quality hire can push the company forward while the wrong hire can create havoc for profits and company culture.
Many hiring managers will run a background check on the employee applicant to ensure they meet their minimum hiring criteria. Just by making a background check part of the hiring process it will weed out certain candidates with a troubled history.
In some industries such as tenant screening, the costs of the background checks are directly or indirectly paid for by the applicant.
However, many employers choose to pay for the background check in order to not discourage quality candidates from applying. These costs can add up quickly if the employer is growing and hiring frequently.
That leads us to our first question.
How much do employee background checks cost?
There isn’t a simple answer because it all depends on what your needs are and what you order.
It’s like asking how much a steak costs.
A NY Strip Steak might cost around $14 a pound while a Japanese Wagyu Steak can cost over a $100 per pound.
Quickbooks attempted to answer this question by giving a range between $20 to $100 per hire, but employee background checks can fall outside of that range still.
Where you’ll save on a background check is doing simple nationwide criminal searches with an identity verification. This lighter package can cost $10 – $20 per report depending on your volume (which we will get to later).
At the other end of the spectrum are county searches. These searches will have the most up to date records on an applicant from a local level.
When someone commits a crime and is found guilty that record is first processed at the county level. Unfortunately, there is no standardization or ruling that guides the county clerk on how and when to report these records to the national databases.
This means the national database is always getting this information second-hand and later than the county records.
Our background check company is located in Erie County which is one of the most expensive counties in the United States when it comes to criminal searches.
An Erie County Criminal Search has a court surcharge of $65.00 due to an access fee charged by the courts. That court access fee is a way for county courts to increase revenues at the expense of people looking for the most up to date records. This access fee varies widely from county to county.
Currently, there are five states that also charge an additional access fee for their statewide criminal records. Those states are Colorado, Wyoming, South Dakota, Massachusetts, and Delaware.
If you’re hiring for a C-Level position (especially in one of the states or counties mentioned above), you’ll easily surpass $100 for a background check.
What to Know Before You Negotiate Pricing
First, you’ll want to call your local County Clerk and ask what their fee is for accessing a criminal search. This will be important in guiding your decision if you want to include a County search or not.
Plan to have an idea of what searches you’re interested in:
- Criminal Search
- Civil Records (judgments, liens, evictions)
- Driver’s Records
- Substance Abuse
- SSN Verification
- Global Homeland Security Search
It’s not one size fits all with employment screening. If your employee will never touch a company vehicle than a motor vehicle driving records (MVRs) won’t matter much.
Understand what searches are necessary for your line of work.
How to Negotiate Pricing
The final price you negotiate is going to depend largely on three variables.
- What searches you want
- The volume you plan to run
- The service you choose to work with
If you decide you want everything available your background check will have a higher profit per report compared to someone who just wants a nationwide criminal search.
Next, take a look at your order history to assess on average how many background checks you run a month. The more you run, the higher the volume, the more likely a service is to work with you on pricing.
It’s recommended that you call and inquire about their pricing on bulk background checks. There is a lot of customization to your needs and emailing everything will create more work for you with all of the back and forth.
If you run 5-10 reports a month, you’ll have enough reports to warrant a discussion on pricing. If you run less than 5 reports a month it will be tough to negotiate a lower price.
Some larger businesses will run hundreds if not thousands of reports a month. In these instances, you’ll have a lot better chance of negotiating a lower price.
Tiered pricing effects profitability
Most CRAs (consumer reporting agencies) that compile your background reports buy their data from various sources.
Most of those data providers will sell on a tiered system.
If you buy $10,000 worth of data a month your cost per report is lower compared to someone who buys $2,500 worth of data a month.
If you run a lot of reports, you’re helping the CRA to reach a better tier with lower data costs.
It’s good to know as it’s something the CRA is aware of with larger clients.
What not to do when negotiating background check prices
What you don’t want to do is exaggerate the number of reports you’ll run in order to obtain a discount.
If you claim you’ll run 50 reports a month and you run 5, the CRA will notice and most likely attempt to renegotiate or drop you as a client.
The additional savings on those 5 reports are minimal compared to the time spent.
Slow play your hand
If you want you can try and slowplay your hand.
If you run 100 reports a month you can start out by asking what the prices are for 25 reports.
You now have a baseline that you can work from. You could come back to the CRA and then tell them you’re wondering what the cost would be if you ran all departments through their service and you’d estimate about 100 reports a month.
Again, this should only be done if you actually run 100 reports a month, but this slow play technique is a good tactic for negotiating the best price.
When you a buy a car some dealerships starting price will be thousands of dollars above MSRP while other dealerships will start a few hundred dollars above factory pricing.
CRAs are the same way. Some have a lot of margins baked into their prices hoping you don’t ask for a lower price (or shop around) and others offer lower pricing from the beginning.
Don’t be afraid to ask what their hard costs on a report are based on the volume you present. They should be able to answer this question, and if they cannot, it’s probably due to high margins baked into the product.
Bio: Richard Fronczak works at Fidelis Screening Solutions and provides tenant screening for property managers and comprehensive background checks for hiring professionals.