Background checks for prospective employees
So you have interviewed the ideal person for the job. You want to extend an offer and hire them on the spot. However, you should hold off immediately! Before you make any definite job offers, you should perform a background check and a reference check on the person.
Ideally, the prospective employee will sign your hand-dandy “Background Check Permission Form” that you have conveniently pre-prepared of just such an occurrence. This will allow you to get reference information from prior employers and even do a credit check.
If you want to formally request information in writing from a prior employer, use a pre-prepared “Reference Check Letter.” Ensure that the prospective employee has given you permission to do so before you contact the employer. You can also just simply call them on the phone, like most of the civilized world does.
You may discover that past employers are reluctant to give much information other than confirming employment, position and salary. This is out of fear of getting sued should the company say anything bad about the former employee. And yes, your company should have the same policy when it comes to your own departing employees.
From a fact-checking standpoint, there are other steps that you can take to make sure your background search is thorough:
School and educational experience
Some people may lie about the degrees that they have earned or where they went to school. Definitely worth checking out those claims.
Talk to the candidate’s former supervisors
If you can, try to talk to the candidate’s former supervisors – they will provide much more meaningful information than the company’s human resources department
Check for felony convictions
For sensitive jobs, such as those in which the employee handles the money, check to see if the candidate has any past convictions
Verify past employment
Verify that the employee worked at each of the companies listed, at the position listed, and check the dates of employment.
Keep in mind that finding out a candidate lied about any of the above may be a tip off to bigger problems.
 Richard D. Harroch, Small Business Kit for Dummies, (Wiley 2nd Edition)(2004).