Employers are permitted to conduct extensive background checks both at the time of hiring as well as during the employee's course of employment. This basic employer right covers criminal records, employment or education verification, credit reports, motor vehicle records, references and more.
I always advise employers to continue credit and software searches during the course of the employee's employment, especially if the employee's responsibilities are increasing. I also advise employers to first inquire about the applicants and employees background directly from them. Employment applications are an excellent method of inquiry, and also allow the employer to ask the applicant/employee for permission to run and continue to run background checks.
Please note, however, that there are limits to getting employment information based on what city and/or state your business is located in, as well as what the job position is. For instance, the federal Equal Employment Opportunity Commission (EEOC) has strict guidelines on several important parts of background checks that will apply to software searches. The EEOC, for example, has a seven year limit on asking about arrests, but no time limit with respect to asking about convictions. The EEOC also prohibits an employment decision strictly on the basis of a prior arrest or conviction. California goes even further than the EEOC, however, and completely prohibits all inquiries about arrests and convictions.
If you do decide to use software to run an employee background check, it's absolutely crucial that you use legal and accurate software to conduct the search. Many state arrest records are incomplete; employers usually rely on a county database to identify arrests. Using inaccurate software search data can be cause for a lawsuit. The average jury award for making a negligent mistake in hiring is more than $840,000!
Make sure to consult with an attorney so that you can make sure that you are following federal and state guidelines, as promulgated by the EEOC and your state's Department of Labor. Don't risk getting sued because you used software that illegally mined information on employees - prospective or current. The risks of finding and/or acting on inaccurate information inappropriately are poisonous to your business.
Again, make sure to consult an attorney so that you can protect yourself and your business.