Employee Background Check — How to Avoid a Lawsuit? | S-Law

A Case of Late Background Check

Jacob, a seasoned employer in the high-tech field, decided to hire a new employee after a particularly successful interview. He signed the employment contract, but only afterwards did he start checking the employee's background.

Jacob quickly discovered old social media posts that raised questions about the employee's suitability for the position. When he decided to annul the agreement, the employee sued him for breach of contract, and the compensation awarded to Jacob was 400,000 shekels.

The most important point is: always conduct a background check before signing an employment contract.

What the Law Actually Considers

In Israel, the law does not prohibit employers from conducting background checks on potential employees, but they must understand that this is a sensitive process that can lead to significant financial consequences if not conducted timely.

The law mainly addresses the issue of employee privacy and the balance between their right to privacy and the employer's right to know relevant information about the employee. The law requires employers to inform the employee about the check and obtain their consent.

In Jacob's case, he did not follow the correct order by signing the contract first and then conducting the check. This led to a breach of contract and significant legal expenses.

When It's Relevant — Checklist

✓Conduct background check before signing the contract
✓Obtain the employee's consent for the check
✓Respect the employee's privacy during the process
✓Avoid hasty decisions based on unverified information

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The Relevant Law

חוק רלוונטי

Privacy Protection Law

Prohibits violating employee privacy without consent

The penalty for violation can be a significant monetary fine

The Privacy Protection Law requires employers to respect employees' privacy rights, especially concerning background checks. The law mandates employers to obtain the employee's consent for the check and be transparent about the reason for the check.

In Jacob's case, failure to comply with the law led to a lawsuit and heavy compensation. To avoid similar situations, it's important to act according to the law before signing an employment agreement.

Questions Everyone Asks — But Nobody Asks the Lawyer

Can I check the background of every potential employee?−

Yes, but it must be done according to the law and with the employee's explicit consent.

What counts as a privacy violation?−

Any check without consent or unnecessary exposure of personal information is considered a privacy violation.

What to do if I've already signed a contract and discovered an issue?−

Consult with a lawyer immediately to understand the legal options.

What is the cost of such a lawsuit?−

The cost can be very high, like in Jacob's case, who paid 400,000 shekels.

How to protect myself in the future?−

Always conduct a background check before signing a contract and seek legal advice when needed.

Real Situations — Which Side Are You On?

A bank manager signed a contract with a financial advisor and only then discovered criminal offenses in his past. Result: lawsuit and monetary compensation.
A startup CEO conducted a background check before signing and found problematic posts — did not proceed with employment and avoided a lawsuit.
A restaurant owner hired a chef without a background check and later discovered negative publications — lost clients and had to pay compensation.

What to Do Right Now

The first step is to check every job candidate before signing a contract. Ensure you have all the necessary information and that the candidate is suitable for the position.

If you ignore this, you might find yourself in a tough legal situation that could cost you a lot of money and legal expenses. Contact a lawyer if you have questions or concerns.

Employee Background Check — When Could It Cost You 400,000 Shekels?