Vendor Background Screening: What Should You Check Before Starting a Relationship
Your organization likely already works with a variety of vendors to help manage work processes and complete special projects. In many ways, the vendors you work with are an extension of your organization, especially if they place individuals on-site in the workplace. For example, in an environment such as a hospital or health system, per diem or traveling nurses, and even volunteers, have access to patients and sensitive areas. How well you know those vendors—and their employees—can have sizable implications for your organization.
Given how deeply embedded vendors can be in the day-to-day operation of your business, it’s critical to make sure you know who is in the workplace. With vendor background screening in place, your workplace doesn’t need to be vulnerable to poorly screened or unscreened third parties. Instead, you can protect employees, customers, visitors, and patients.
The Risks of Not Screening Your Vendors
Conducting vendor background checks isn’t an extra precaution you take to protect the workplace, it’s a necessity. In fact, without thorough vendor screening, you can risk the safety of others and open the organization to financial or reputational loss.
Consider this example of what can happen without a vendor background screening program in place: a hospital in the middle of a medical wing expansion works with different construction companies, some of whom have workers on-site performing different aspects of the project. It’s possible that one of the construction companies has a poor safety record and has experienced construction site injuries. Or perhaps one of the employees of the construction company appears on a sex offender registry and is performing work next to the pediatric unit. Without proper vendor screening, you may never know about the previous violations of the construction company or its employees—until an incident occurs.
No matter your industry, the risks of not conducting vendor background screening are many. They can include:
- Loss of reputation: If an unscreened vendor or contractor causes an accident or commits malpractice, you could lose customers or patients.
- Fines and lawsuits: An accident or injury caused by a vendor who didn’t undergo a thorough background check can result in legal penalties and costly lawsuits.
- Inconsistencies in the background check program: Patients and other employees can be put in harm’s way if you don’t have the same quality of background check for both employees and vendors/contractors.
- Non-compliance: An agency or staffing firm conducting poor background checks can put you at risk of non-compliance by extension. One staffing agency was sued for violating Fair Credit Reporting Act (FCRA) background check regulations when hiring a temp to perform work in a hospital.
What to Check: The Types of Vendor Background Screening
When you’re starting a new relationship with a vendor, you want to know as much as you can about its business, key individuals, and track record. Whether the vendor is a new supplier, an IT contractor, or a traveling nurse agency, you need the peace of mind that the relationship will not expose your organization to compliance violations and other risks.
There are two main categories of vendor background screening: company background checks and vendor workforce screening. Each type of vendor screening has distinct screening services you can configure to meet your individual needs. Each also answers some of the critical questions you may have about your new vendor. For example, is the vendor a legal business entity? Does the vendor, or its principals, have a criminal history or pending lawsuits? Has the vendor been barred from doing specific types of work? Are the vendor’s employees properly licensed to perform work in the organization?
Here are some of the available vendor screening tools to help you find answers to questions like these.
Company Background Checks
When you embark on a new business relationship, you want to know if the vendor has a history that would put your organization at risk. The vendor you're considering could be distracted by past legal action, or it could be doing business under a different name to conceal something in its past. Either way, you want to know.
A company background check helps you to learn about prospective and existing vendors through targeted due diligence searches, including:
- Corporate record verification
- Criminal convictions
- Civil litigation
- Bankruptcy cases
- Social media
- Pending judgments and liens
- Government sanctions
- Regulatory violations
- Federal and state debarment matches
Vendor Workforce Screening
Your vendors’ employees are often front and center in the workplace, operating as an extension of your full-time workforce. They can be contracted food service personnel, patient transportation workers, or office custodial staff. You want to be sure you know who those individuals are and that they possess the necessary background to legally work as contractors or subcontractors in your organization.
Vendor workforce screening gives you greater control over the screening criteria and the process used to vet non-employees. Workforce screening can confirm if a vendor employs individuals with legal work authorization and that they possess the required licensing to perform work in your organization. Examples of services included in vendor workforce screening include:
- Criminal history
- Employment verifications
- Employment exclusions and debarments
- Driver records
- Drug testing
How to Get Started with Vendor Background Screening
Similar to employment background screening, you’ll need to approach vendor screening with a good idea of your screening goals and the types of company or vendor workforce searches appropriate for your organization and industry. You’ll also want to conduct screening professionally and in compliance with federal and state law.
As you get started with vendor screening, you may find your organization works with more vendors than you think. Therefore, it’s a good idea to list and categorize each vendor, so you know the extent of your vendor network and the potential associated risks.
Not every vendor will require the same kind of screening. The nature of the vendor relationship will guide the types of background screening services you want to use. For example, a vendor providing onsite workers should have searches for criminal history, employment exclusions, and in some cases, driver records.
Employment and vendor background checks have some similarities, but they are not exactly the same. You’ll need a background screening partner who understands the difference. An experienced background screening provider can work with you to review your existing practices, assess potential risks, and guide you in the development of a comprehensive screening program for your vendor relationships.
Your background screening provider can provide:
- A vendor screening program sized for you, whether you work with a small number of vendors, or engage several vendors and contractors across multiple worksites and geographies.
- Cloud-based technology configured to make it easy to order vendor background checks, download and review reports, and exchange e-disclosures and authorizations.
- Regulatory guidance that helps you keep your vendor screening program in compliance with federal, state, and industry-specific laws.
Screen Vendors Before Getting Started
Before committing resources to a new vendor relationship, be sure you’re not unknowingly opening your organization to risk. Vendor background screening is a powerful tool that not only tells you more about a company, but also its workforce. With an expert background screening company as your partner, you can complete thorough background checks and vendor due diligence, and you can pursue new vendor relationships with confidence.