It doesn't take a Big 5 accountant or a rocket scientist to figure the value of pre-employment background checks.

It's simple. Run a basic background record check or risk losing tens of thousands of dollars from the inside heists of a new hire with a devilish past.

In that equation, one could even argue that dropping $500 to $1,000 on a full-tilt background check -- criminal, civil, domestic, driving record, bankruptcy, etc. -- may be a bargain in the long run.

So let the hirer beware these days, background investigators say.

Don't let down your guard
In today's tight labor market, small business owners may be tempted to let down their guards. But it's not worth it.

Consider these events:

--- A man applies for a job as a driver at a well-known auto repair shop while being free on bail for auto theft.

--- Another applies for an manager's position in Los Angeles while having a felony spouse abuse warrant outstanding in the Midwest.

--- Doctors whose licenses were suspended in one state apply for positions in other states. Some medical professionals receive licenses by providing phony degrees.

--- Job applicants who turn out to be involved with organized crime.

Many people submit false information about a number of items. Among other things, it is routine to find on résumés that management trainees are transformed into managers, the word 'assistant' disappears from job titles and the word 'senior' gets added.

How many liars are out there?
Different studies have come to different conclusions about how common it is for job applicants to misrepresent themselves.

Most common distortions

Bogus college degrees or scholastic honors, or distorted majors and minors. Incorrect dates of employment, usually to cover long gaps between jobs. Puffed-up job titles, salaries and duties at previous positions.

Best precautions

Require all applicants to fill out a formal job application. Look carefully at all documents. Compare an applicant's résumé to the job application for discrepancies. Conduct a basic criminal background check. Check claims of education with the appropriate college official. If the applicant claims a skill, test it.

The Liars Index, put together by Jude M. Wern & Associates of Brookfield, Wis., looks twice a year at executive résumés and the most-easily checked reference point -- educational claims.

The Liars Index pegs the number of liars in 1999 at 16.7 percent and holding steady. That figure is within a few percentage points of where it's stood for the past five years.

Other studies that look at all aspects of résumés place the number much higher. About one-third of résumés have some degree of puffery, according to several surveys, and as many as two-thirds of all job applicants say they have stretched the truth at least once in an effort to land a job.

Your friend, the Internet
No matter how many there are, the means to catch them are also more available and affordable than ever. Key to this new investigative capability is the Internet. In many states, criminal records, civil suits, driving offenses and property data can be obtained online for a fee.

Entire Internet-based start-up companies have formed to provide employers one-stop shopping for background checks. Among them are companies such as US Search.com, KnowX.com, AtYourBusiness.com, Infocheck Inc. of Greensboro, N.C., and Background America Inc. of Nashville, Tenn.

ABOUT E-VERIFY   E-Verify is an Internet-based system operated by U.S. Citizenship and Immigration Services (USCIS) in partnership with the Social Security Administration (SSA). E-Verify is currently free to employers and is available in all 50 states. E-Verify provides an automated link to federal databases to help employers determine employment eligibility of new hires and the validity of their Social Security numbers.

SmallBiz choices abound
Most customize their pricing to accommodate the small business.

AtYourBusiness.com, for example, offers a package through its Avert service that includes some free checks, discounts, consulting services, legal support and other pre-employment screening help -- all for a monthly charge of $20.

KnowX.com also offers discounts and incentives for volume purchasing of record checks. KnowX markets itself as a source companies can use to check up on other firms with whom it plans to do business, but it can also be used for individual back grounding.

In addition to large firms, there are many smaller background consultants nationwide such as Personal Profile Inc. of Torrance, Calif.; Prove International Co. of Gross Pointe, Mich.; and Validata Inc. of Atlanta. Prices can range from $100 to $200 to do pre-employment checks.

But many smaller companies may still find the whole back grounding thing a daunting process, something that feels a little awkward and sneaky to be digging into the past of someone who may eventually become a colleague.

The intensive interview approach
In your own back grounding efforts, focus on the statements of former employers, personal references, school transcripts and degree verification.

Having the piece of paper showing that you did the check is extremely valuable if the employer gets sued for negligent hiring.

The most difficult area of background checks is getting information from former employers regarding the applicant's skills, abilities, personality and performance. They are often hesitant to discuss a former employee beyond the basics for fear of being sued for defamation.

So relie heavily on the interview with the applicant and ask extensive, in-depth questions about technical subjects. Ultimately, a con won't be able to stand up to the high-tech interrogation.

Maybe so, but many experts wouldn't bet the house on it.

At least do a criminal check
Take another example. A few years ago, a client of ours hired a new accounting assistant who was on the payroll only six months, but in a mere 90 days she forged $12,000 worth of checks and deposited them in a bogus account. An internal audit found the missing funds.

The accounting assistant was on parole for check forgery and substance abuse. The business neglected to do a background check. They found out when her parole officer called one day looking for her.

So it would be prudent for any small business to spring for the $15 to $20 to pay for a basic state police criminal background check -- regardless of how infrequently you hire new employees.

Having a piece of paper showing that you did the check is extremely valuable if the employer gets sued for negligent hiring. Keep in mind that in most states, an employer can base hiring decisions on convictions, but not on arrests.

Getting past ex-employers' silence
Employers increasingly are being held legally liable for the damaging workplace behavior of their employees -- much more often than a company is sued for defamation because they provided a negative reference for a former employee. 

Most attorneys tell their clients to use a name, rank and serial number approach to references, out of fear of getting sued by the employee for slander or by the new employer for omitting key information. In fact, these types of suits are extremely rare. But it's so hard for an employer to get substantive responses to reference questions that some states have adopted laws encouraging openness in the process.