Why Background Screening Companies Are the Future of Employment Verification
A New Era Begins
After 30 years in the pre-employment screening industry, I’ve witnessed firsthand how challenging employment verifications have been for background check companies. Providers like The Work Number raised prices year after year, and screeners had limited alternatives. The cost pressures were real, and the options were few.
For decades, employment verification has been shaped by payroll providers and their exclusive partnerships with third-party vendors. Critics argue these arrangements effectively turned employment data into a revenue stream for both payroll providers and verification vendors. Verifiers like background check companies and mortgage lenders paid premium fees, employers had limited oversight, and employees had minimal visibility into who was accessing their information. A few years ago,
In the ongoing Greystone Mortgage Inc. v. Equifax case, Equifax stated in court filings that it pays revenue shares to payroll providers and enters into multi-year contracts with some of the nation’s largest employers and processors, including ADP and Paychex.² Specifically, Equifax admits in its court filings that “it competes for relationships with data providers, including by paying some data providers a ‘revenue share’ for each transaction matching their data to a verification request.” Plaintiffs allege these practices limited competition and inflated costs for verifiers.
Most employers don’t even realize this “payroll add-on” exists. Once they sign a payroll contract, their data often flows into a third-party verification system automatically. The employer doesn’t see the day-to-day activity, doesn’t control who accesses the information, and in many cases doesn’t even know when or why an employee’s record is being accessed. That lack of visibility isn’t just frustrating — it’s risky. When employees discover their information has been shared without their direct knowledge, they rarely blame the payroll company. They blame their employer.
That legacy model is now being challenged — legally, commercially, and by employees demanding greater transparency.
The Advantage Screeners Can Now Leverage
Background screening companies already sit at the center of the employer relationship. You are the trusted partner for hiring, compliance, and risk management — and that position creates a natural opening to lead in employment and income verification.
Here’s the reality: today’s employment verifications often cost $50 to $120 per request. That frustrates not only screeners, but also the clients you serve. Employers face high costs, verifiers question the value, and applicants are left in the dark about how their data is being shared. The result? Many clients cut back on ordering employment verifications — which lowers revenue and can even diminish valuation multiples when investors see declining verification volume.
A modern dual-path model changes this dynamic. With a flat $29, no-hit/no-fee structure, screeners can:
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Add a seamless verification layer onto existing workflows
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Offer predictable pricing that clients will actually support
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Create recurring revenue that grows instead of shrinks with demand
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Strengthen their reputation by protecting employee privacy and giving employers back control
In other words, you can be part of the solution — and capture new value at the same time.
Powered by a Dual Waterfall Approach
This shift is made possible by a new way of structuring verifications:
Employer-Hosted Path – When an employer activates the platform, verifications are instant, secure, and fully compliant — all while keeping data under employer control.
Employee-Permissioned Path – If employer data isn’t available, the employee can securely log in to their payroll system to approve the request. This protects privacy while still ensuring a fast result.
Together, these two paths form a dual waterfall that delivers results for verifiers while increasing transparency for employers and employees. For a deeper dive into how employment verification waterfalls work — and why some legacy approaches may fall short — see our article on Employment Verification Waterfalls.
Additional Advantages Include:
Direct-to-Payroll Connectivity – Secure integrations with over 60 payroll providers, enabling real-time results.
No Warehousing, No Risk – Data does not need to be aggregated. Each verification can be one-time, on-demand, and employer-controlled.
Employee Privacy and Control – Participation in the employee platform is optional. If employees engage, they receive real-time notifications, can approve or deny requests, and can set global rules. If they don’t, data is released under the Fair Credit Reporting Act (FCRA) and state reporting laws, as legally permitted.
Revenue Growth Engine – Screeners can layer a recurring revenue stream directly onto their existing services.
The Future Belongs to Screeners Who Lead
For this model to work at scale, employers must participate by activating a modern verification provider. Background screening companies are uniquely positioned to make that happen, leveraging their employer relationships to drive adoption.
For employers, it means control.
For employees, it means privacy and empowerment.
For verifiers, it means speed and savings.
And for background screening companies, it means stepping into the role of trusted leaders who help reshape the market for the better.
The traditional payroll add-on model faces growing scrutiny. The future of verification isn’t warehoused — it’s connected, transparent, and fair. And the companies positioned to lead that future are background screeners.
FAQs for Background Screening Companies
1. Why should background screening companies care about employment verification pricing?
Employment verifications often cost $50–$120 under legacy models, which frustrates clients and can reduce order volume. High prices directly impact your revenue and, over time, can affect your company’s valuation. A flat $29, no-hit/no-fee model may restore client confidence, encourage more orders, and create recurring revenue you can build on.
2. What is the “payroll add-on model” and why is it under scrutiny?
The payroll add-on model is when payroll providers automatically route employer data into third-party verification systems. Employers often don’t realize this is happening. They may lose oversight, employees may lack visibility, and screeners face premium fees. When employees eventually discover their data was shared, they often hold the employer responsible — creating reputational risk for your clients.
3. How does the dual waterfall model work?
The dual waterfall provides two secure, compliant pathways for verifications:
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Employer-Hosted Path: Employers who activate the platform can deliver instant, secure results under their direct control.
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Employee-Permissioned Path: If employer data isn’t available, the employee can log into their payroll system to approve the request.
This approach aims to deliver results for verifiers while giving employers and employees transparency and control.
4. What makes the $29 no-hit/no-fee model different?
Some legacy vendors charge even when no data is returned, leaving screeners and their clients paying for unsuccessful requests. The modern approach only charges when data is delivered — no hit, no fee. That means your clients only pay for successful verifications, making it easier to justify costs and retain trust.
5. How does this model benefit employers and employees?
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Employers regain control over their data, may reduce reputational risk, and can provide verifications without giving up oversight to third parties.
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Employees gain transparency and optional participation. If they engage, they get real-time notifications and can approve or deny requests. If not, data is only released in line with the Fair Credit Reporting Act (FCRA) and state reporting laws.
6. How can background screeners generate new revenue through employment verifications?
By layering employment verification onto existing workflows, screeners can create a recurring revenue stream. Predictable pricing may encourage higher client adoption, which can grow volume and strengthen financial performance. This not only has the potential to increase top-line revenue but may also improve valuation multiples by demonstrating sustainable, scalable growth.
¹ NBC News: Your employer may share your salary, and Equifax might sell that data (Jan 30, 2013). Read the article here.
² Greystone Mortgage Inc. et al. v. Equifax Workforce Solutions LLC, Case No. 2:24-cv-02260 (E.D. Pa.). View the court filing here.
DISCLAIMER: This article represents my personal opinions and analysis based on publicly available information and my 30 years of experience in the employment screening industry. Nothing in this article should be construed as legal advice. The reference to the Greystone Mortgage Inc. v. Equifax case is based on publicly available court filings; no conclusions about the merits of that litigation are intended or should be inferred. Readers should consult their own legal counsel regarding employment verification practices and compliance obligations. I have financial and business interests in modern employment verification solutions.