By Melissa Foiles, Founder, ILYM Consulting, and Chas Scott, President, EDIFY Background Screening
For businesses operating in drug testing and occupational health services, entering the background screening industry presents a natural extension. Both services align closely around compliance, risk mitigation, and workplace safety. According to the Professional Background Screening Association (PBSA), more than 90% of employers use background screening as part of their hiring practices, demonstrating a strong market demand. However, entering this field requires more than simply adding a new product line. It involves learning a new regulatory framework, restructuring operations, and helping clients understand their responsibilities.
Here is a five-part framework for drug testing providers interested in entering background screening in a responsible, legally sound, and growth-oriented way, leveraging PBSA standards to ensure operational excellence.
1. Understanding background screening: The opportunity and compliance requirements
Background screening verifies information about individuals (typically job applicants or tenants) to help organizations make informed decisions. These reports may include criminal history, employment and education verification, identity checks, and more. A typical package might include a Social Security trace, national database check, a county criminal check, and verification of a candidate’s last two employers.
For drug testing providers, adding background screening services can diversify revenue, strengthen client retention, and support bundled service offerings. PBSA’s Annual Industry Survey notes that 73% of employers value screening for workplace safety, while 68% use it to support compliance.
As a Consumer Reporting Agency (CRA), your business will operate under the Fair Credit Reporting Act (FCRA) and other federal and state laws. This includes handling sensitive data securely, supporting consumer disputes, properly vetting clients, and ensuring clients understand their compliance obligations.
Key considerations:
- Define the scope of screening services (e.g., criminal checks, verifications, MVRs)
- Understand what qualifies as a “consumer report” and an “investigative consumer report”
- Ensuring compliance with FCRA and other applicable laws
- Developing clear policies and procedures for client support and secure report delivery
- Educate clients on their legal responsibilities regarding disclosure, authorization, and adverse action, use of consumer reports, access restrictions, and securing reports.
Example: A drug testing provider might start with a basic package including a Social Security Number trace, a national criminal database search, and county-level criminal checks to complement existing services, and later expanding into MVRs or education verifications as expertise grows.
2. Compliance deep dive: FCRA, state laws, and risk exposure
The FCRA is the cornerstone regulation governing background screening. Under the FCRA, the employer (your client) is responsible for:
- Providing a clear and conspicuous written disclosure
- Obtaining written authorization from the individual
- Issuing required adverse action notices (pre- and post-)
IMPORTANT NOTE: CRAs do not collect signed disclosures and authorizations. That responsibility lies with the employer. However, CRAs must educate clients and provide tools and guidance to reduce misuse and risk.
CRAs (that’s you), on the other hand, are responsible for:
- Ensuring maximum possible accuracy of reports
- Reinvestigating disputed information
- Educating clients about their responsibilities related to disclosure, authorization, and adverse action
- Vetting clients and maintaining compliance-related documentation
- Ensuring detailed policies and procedures are followed throughout the background screening process to protect both the client and the candidate.
IMPORTANT NOTE: While CRAs are not legally required to provide templates, they may choose to offer sample materials and templates to help clients meet their compliance responsibilities. These samples should be clearly marked as examples only and you need to clearly communicate that sample documents are not substitutes for competent legal advice.
State and local laws increase complexity with ban-the-box laws, fair chance hiring ordinances, and restrictions on reporting certain types of criminal records varying widely across jurisdictions.
For instance, California prohibits reporting certain convictions more than seven years old and requires unique language in disclosure forms. Similarly, New York requires specific disclosure language under the New York Fair Credit Reporting Act, including a separate disclosure document for investigative consumer reports.
PBSA notes that 47% of employers cite navigating state-specific regulations as a top challenge in background screening. Understanding these nuances is essential.
Key compliance steps:
- Maintain documented policies and procedures for FCRA compliance
- Properly vet your data sources to ensure legally reportable information
- Map out state-specific reporting limitations and notice requirements
- Train your staff to respond in a timely manner to consumer disputes and client inquiries in compliance with the FCRA and state laws (keeping in mind when a consumer contacts you the compliance clock is ticking).
3. Building operational workflows: Systems, partners, and processes
Launching a background screening operation requires investing in the right systems and vendor relationships. Many CRAs use platforms (such as Accio, FRS, Epic Concepts, TazWorks) to manage workflows, audit logs, and report delivery. These tools are essential for scalability and compliance.
To meet industry standards, workflows must be robust, secure, and compliant with FCRA requirements. You will need to establish relationships with:
- County court runners or wholesale data providers
- Employment and education verification teams
- MVR and sanction check vendors
- Technology partners for security, audit logging, and document control
Operational workflow considerations:
- Intake forms and digital consent workflows
- Flexible search packages and logic-based filters
- Turnaround timelines for each search type
- Internal audit trails and quality control checks
- Secure portals client access and report delivery
EXAMPLE: A CRA might partner with an existing CRA or a platform like FRS or Epic Concepts to automate criminal record searches across multiple counties, ensuring results are delivered within 48-72 hours while maintaining audit logs for compliance.
For many newcomers to background screening, starting with a focused screening package (e.g., criminal background and basic verifications) or partnering with an established CRA for backend processing and compliance is a manageable and advisable entry point.
4. Supporting clients: Templates, education, and risk mitigation
A successful background screening business does not deliver just data. It also educates its clients. Many employers do not understand their obligations under the FCRA, which increases your risk if they misuse the reports you provide.
- PBSA’s survey indicates that 62% of employers rely on their screening provider for guidance on compliant hiring practices.
To support compliance:
- Offer educational resources on the FCRA and local laws
- Provide sample templates for disclosure, authorization, and adverse action (clearly marked as examples, not legal advice)
- Supply the FCRA Summary of Rights Under the FCRA notice
- Host onboarding webinars and provide access to supplemental training materials related to client legal responsibilities.
- Insure your Master Service Agreement details client responsibilities and confirming they understand their obligations by getting a signed attestation.
Support tools:
- Webinars and/or video guides on ban-the-box and Fair Chance laws
- Sample email templates for pre- and post-adverse action notices
- Access to help desk or compliance support for common questions
EXAMPLE: A CRA might create a client portal with sample templates, a compliance checklist, and training materials, helping reduce client errors while reinforcing their independent responsibility.
5. Scaling strategically: Growth through a compliance-first lens
As your screening business grows, building a foundation of risk management and demonstrating credibility becomes a competitive advantage. Joining the PBSA is a great start for building this foundation. Representing more than 700 members, the PBSA promotes ethical standards and compliance with the FCRA, helping organizations of all shapes and sizes scale. To scale successfully, you will need to:
- Document internal policies and standard operating procedures and update them regularly
- Launch internal compliance training programs
- Institute regular audits of your processes
- Monitor KPIs, such as hit-rate, turnaround time, and dispute resolution rates
- Automate client education using CRM tools and onboarding flows
Positioning tips:
- Emphasize your compliance-first approach as a value-add
- Consider bundle screening services with existing drug testing offerings
- Build a consultative sales process focused on educating prospective clients
Example: A provider might market a bundled drug testing and background screening package, emphasizing their compliance expertise, which appeals to 68% of employers prioritizing compliance.
Expanding from drug testing into background screening is a logical and profitable move for businesses focused on compliance and workplace safety. However, success requires more than ambition. It demands careful education, operational discipline, and a well-informed client base. CRAs must invest in compliance infrastructure and continually educate clients, helping them navigate their legal responsibilities without assuming those obligations. By following this five-part framework, your business can confidently enter the background screening market while minimizing risk and building trust for long-term success.
Chas Scott is the founder and President of EDIFY Background Screening, a Greensboro, NC-based Consumer Reporting Agency serving clients nationwide. With more than 15 years of leadership in the background screening industry, Chas brings deep expertise in operational efficiency, compliance, and client-centered solutions. He holds an Advanced FCRA Certification from the Professional Background Screening Association (PBSA).
Melissa Foiles is the founder of ILYM Consulting and an internationally recognized expert in background screening compliance. With more than 13 years of experience and an Advanced FCRA Certification, she helps CRAs navigate complex regulations; prepare for accreditation; and build strong, audit-ready operations. Melissa is known for blending strategic expertise with a deep commitment to integrity and the human impact of compliance.