Crooks is rubbing salve on his back. He earned the nickname Crooks because a horse kicked him and now he is permanently crooked- hence "Crooks". This seems like a fairly unimportant event in the story, but in fact it is this injury that binds Lennie and Crooks because they both have deficiencies. In a way Crooks' injury comforts Lennie and George because they don't feel like such outsiders at this job, in fact they both think this is a place that they can stay for a while, hopefully long enough to build their stake for their ranch.
Crooks is putting some liniment on his back because he is in pain as a horse kicked him in his back. This is told by Candy in chapter 2 p.21, "Yeah. Nice fella too. Got a crooked back where a horse kicked him." which resulted in having a permanent crooked back, hence why he is called "Crooks".