Running background checks on potential new hires is standard practice today. And for good reason – carefully screening applicants helps employers make better hiring choices and avoid negligent hiring risks. But checks aren’t free. The costs add up, especially for employers hiring frequently. So who should pay for a job candidate’s background check? The company or the candidate themselves? It’s a complex issue with convincing arguments on both sides. 

In this post, we’ll look at the pros and cons of employers footing the bill versus asking applicants to cover the costs. You’ll learn best practices companies use to handle payment fairly and legally. While there’s no consensus on the one “right” approach, understanding the tradeoffs involved can help employers develop a policy that works for their needs. Let’s dive in.

Why Employers Care About Background Checks

First, why do most employers require checks in the first place? There are a few key reasons:

To Verify What Candidates Claim – Embellishing credentials is too common – studies show over half of applicants “stretch the truth” on resumes. Checks help confirm work history, education, certifications and other facts candidates include.

To Assess Character – Even honest candidates may have issues like criminal records, financial problems, substance abuse history or poor driving records employers want to know about. Checks help avoid risky hires. 

To Limit Legal Liability – Conducting due diligence provides a strong defense against negligent hiring claims if an employee later causes harm. Checks show the company tried to avoid dangerous hires.

Now let’s look at the common types of checks employers require during hiring.

Common Types of Background Checks

There’s a wide menu of screening options available today. Employers can mix and match components to build custom programs. Typical checks include:

Criminal History

This verifies any past arrests, convictions, incarcerations or pending cases. Certain convictions may disqualify candidates.

Employment and Education Verification 

Employers confirm past jobs, titles, salary, responsibilities and academic credentials. This ensures resume truthfulness. 

Credit Reports

Credit checks provide insight into financial responsibility. Often used for jobs handling money.

Drug Testing

Urine, hair or blood analysis checks for substance abuse and illegal drug use.

Driving Records  

For driving jobs, employers check licenses, accidents, citations and insurance.

Now that we know why checks happen and what they cover, who usually pays the tab when they’re required?

Who Typically Pays for the Checks?

There are three common arrangements when it comes to covering background check costs:

The Company Covers the Cost

Most of the time, employers build the cost of checks into their budgets as a standard hiring expense. They view vetting applicants as part of the process.

The Applicant Covers the Cost 

Some companies take the opposite approach and require applicants to pay all fees needed to be considered. This transfers the burden.

Splitting the Bill

In some cases, employers and applicants split check costs. Like the company paying for criminal checks but applicants covering drug tests.

Larger firms more often absorb the cost, while smaller businesses tend to pass it to candidates. But policies vary widely.

Next, let’s weigh the upsides and downsides of both approaches.

Upsides and Downsides of Employers Paying 

Having the company foot the bill has some benefits but also drawbacks:

Benefits of Employer-Paid Checks

Shows a Commitment to Talent – Paying demonstrates the employer will invest in finding the best people. Makes a company more attractive.

Smooths and Speeds Hiring – With the company paying, checks happen faster since applicants don’t have to coordinate payment.

Drawbacks of Employer-Paid Checks  

Major Budget Costs – For large volume hiring, these fees really add up. That money could be used elsewhere.

Unused Funds – Employers lose money spent on applicants who dropout before completing checks. More dropout = more waste.

Applicant-paid checks have their own pros and cons too.

Pros and Cons of Applicants Paying Their Own Way

While less common, some employers argue it makes sense to have applicants cover their checks:

Why Some Employers Make Applicants Pay

Transfers Costs to Applicants – Employers avoid the expenses associated with checks entirely this way.

Discourages Casual Candidates – People just casually browsing may drop out once they have pay. This weeds out tire-kickers. 

Potential Pitfalls of Applicant-Paid Checks

Turns Off Desirable Candidates – Strong applicants with options may see it as a red flag. Can mean losing top talent.

Harms Candidate Experience – Today’s labor market is candidate-driven. Forced payments may upset applicants.

As we can see, there are two reasonable sides to this issue. What are some best practices for employers who do require applicant payment?

Best Practices for Handling Background Check Payments 

If you decide applicants should cover their own checks, keep these guidelines in mind:

Be Up Front in the Job Posting

Clearly state in any listings that the candidate will need to pay their check fees. Provide approximate costs.

Explain the Rationale to Candidates

Have a good justification ready for why you require applicant payment. Set expectations upfront.

Offer Conditional Reimbursement  

Promise to refund check fees post-hire. This shows the policy isn’t meant to benefit the company.  

Get Written Consent First

Before any check, have candidates sign forms authorizing it and acknowledging payment responsibility. 

Know the Law

Some states limit asking applicants to pay. Understand regulations in your region.

While it’s good to have a standard policy, there may be cases where exceptions make sense.

When Employers Should Consider Exceptions 

Situations where it may be worth the employer paying, even if applicants normally cover costs:

For High Salary Jobs – Absorbing fees for an executive search probably removes barriers to landing a great leader.

If the Check Itself Disqualifies – Seems reasonable to pay if your screening is what denied the applicant. 

When Too Many Refuse to Pay – At some point if you lose too many candidates, it becomes easier to remove the roadblock.

Occasional one-off exceptions don’t mean abandoning the overall policy. But flexibility shows good faith.

Final Thoughts on Background Check Payments

Background screening is a necessary part of hiring. But who pays is a complex balancing act with no consensus approach. Employers paying demonstrates investment in talent acquisition. Applicants covering costs encourages serious candidates and controls expenses. 

There are situations where either policy makes sense. The most important things are setting expectations upfront and handling payments legally and ethically. With a fair, transparent process, employers can choose an approach that fits their needs and culture. The decision should be deliberate, not arbitrary.