Background Checks
Most employers hire outside vendors to conduct criminal background checks. Federal and state laws limit the kind of information you may retrieve and how you use it. (For example, a criminal record is not by itself legal grounds for refusing employment.) Conviction records reside at courthouses around the country, so be wary of screeners who promise instant checks. But database aggregator ChoicePoint ( ) will instantly search an extensive, though not complete, range of sources for less than $100. Screeners can search anything from credit reports to workers' comp filings as well, but the fees can add up. Limit searches to those that materially relate to the job—driving records if the position requires a lot of time in the car, for example.

Drug tests
You need to be burned only once by an employee with a bad habit to conclude that when it comes to your company, security trumps privacy. In any case, more of your competitors are handing out plastic cups—a recent survey found that 84 percent of companies test new hires for drugs.

Reference checks
Reference checking can be time-consuming and frustrating. Previous employers, wary of being sued, often disclose little. Darrow suggests asking for the names of colleagues and supervisors who no longer work for the employer. You may get a clear answer by asking if the candidate is "eligible for rehire." In general, ask leading questions and make inferences from evasiveness and faint praise—if your suspicion is misplaced, the reference will tell you. And document all reference-check efforts, successful or not.