Independent Contractor Background Checks: Your Complete Guide

With today’s competitive war for talent, organisations want contractors faster from around the world to fill niche skillsets. But many companies do not extend the same contractor background checks rigour to their contingent workforce as they do their permanent.

According to a survey from Sterling, contingent workers only go through background screening 60% of the time. Yet they still have access to your building, systems and sensitive data. This leaves your business open to significant data breaches, regulatory exposure or reputational damage.

In this article, we look at some of the biggest risks that not screening your contractors can expose you to and contractor background check requirements.

The importance of background checks

Despite how few contractors are properly screened, the dangers of neglecting contractor screening are significant. Here’s some important stats:

•  of employers find lies or misrepresentation within CVs.
• Stolen identity complaints have risen by 113% since 2019.
• One in five companies have experienced candidate identity fraud.

The danger is not just relegated to employing poor candidates: organisations can open themselves up to significant regulatory penalties if they don’t properly check contractors.

For example, under the current Immigration Act, employers are responsible for verifying the validity and ongoing currency of ‘right to work’ visas of their contractors/workforce.

In the event of an organisation engaging a contractor whose visa is not current or incorrect; the organisation can face fines of up to $315,000 per contractor as well as the adverse reputational impact. Directors are also liable for custodial sentences.

What are the contractor background check requirements?

There are an overwhelming amount of checks that organisations can conduct through third party organisations or publicly available information. We’ve listed some below:

• Right to work – A Visa Entitlement Verification Online (VEVO) check ensures that the candidate is legally allowed to work in Australia, by validating the requirements of their visas.
• National Police checks (ACIC) – This check assesses whether the candidate has any court proceedings against them or pending charges, by searching through Australian police databases.
• Anti-Money Laundering/Counter Terrorism Financing checks – This check examines sanctions and watch lists internationally to ensure you’re not hiring high-risk individuals.
• Academic Qualification Checks – By checking educational institution records, this check determines whether the candidate has completed their qualification at the place they’ve said.
• Behavioural Reference Checks – During pre-screening, trained specialists interview the candidate’s references to determine whether the candidate has the right experience and cultural fit.
• Online Reference checks – A quicker alternative to over the phone reference interviews, these checks are facilitated over email through an automatic system.
• Public Record/Basic Credit Check – This check determines whether the candidate has run into bankruptcy or other judgements, using public information from across Australia.
• Credit File Authentication Check – This is an entire summary of a candidate’s credit history, and includes employment history, loan applications and debt agreements.

When building these checks into your hiring process, organisations also need to balance the importance of a smooth and seamless onboarding experience. This can also be compounded by the fact that many contingent workers are sourced through multiple recruitment suppliers, giving them an inconsistent experience.

By consistently applying contractor screening policies in your organisation through a third party responsible for the engagement, management and payment of your contractors, you can mitigate risk while ensuring a positive experience.

How CXC does it

CXC is responsible for compliantly engaging and managing contingent workers on behalf of our clients. As part of our compliance standards, contractors require a mandatory right to work check through VEVO as part of our onboarding service.

CXC can also facilitate additional checks through our strategic partnership with Equifax, the leading provider of background and reference check services in Australia.

Finally, CXC have a standalone service called CXC Comply, our global contingent worker vetting and compliance platform. Through our online technology, we ensure that contractors:

• Are properly classified under the correct engagement structure.
• Have their right to work and visa status verified.
• Have their employment history, criminal record and credit screened.

As one of the world’s top suppliers of contingent worker management solutions, CXC is perfectly positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across 5 continents, and with decades of experience, we can assist with every aspect of your program.

If you would like to find out more about how we can help with your contingent workforce solutions please contact us here.

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