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Performing Employee Reference Checks

5 Tips for Effective Reference Checks

It often is what you don’t know about a job applicant that can hurt you. As an employer, you can make sure you know more about who you are hiring by performing a reference check for employees.

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There are many reasons why you should check the references of prospective employees. Often, applicants’ resumes and application forms are incomplete or even contain misrepresentations that could lead to a bad hiring decision. So, if you do a pre-employee background check and check references, you can help eliminate undesirable applicants, identify the best candidate, reduce turnover and training costs, and even prevent liability for negligent hiring.

(Download free Hiring model policy including HR best practices and legal background.)

At a minimum, carefully conducted reference checks can help ensure that your hiring decisions are more informed. Generally, a reference check for employees should be made before the offer of employment is extended so that you have as much information about a candidate as possible. However, it may be difficult to get a reference-giver to provide helpful information because of their fears of defamation claims and restrictive corporate policies allowing only the release of a former employee’s “name, rank, and serial number.” The following five strategies can help your organization conduct effective employee reference checks:

1. Insist that every applicant sign a release.

Never check employee references before obtaining the candidate’s written permission to do so. Consent is a strong defense to defamation and other tort (wrongful act) claims an applicant may bring, and it also generally is required under the Fair Credit Reporting Act before an employer can use a third party to conduct checks. To protect further against applicant lawsuits, the consent form also should include language that releases the organization and its agents, as well as former employers and reference givers, from any legal liability that may result from the checks.

2. Get job-related information from applicants.

Before conducting employee reference checks, request that applicants provide background documentation such as old pay stubs, business cards, job descriptions, and performance appraisals. These items can be used to verify information provided in resumes, application forms, and interviews and can help identify specific issues to follow up on in reference inquiries.

3. Minimize reference resistance.

Expect reference sources to be guarded, or even defensive, since so many organizations try to limit potential legal exposure by releasing only the “name, rank and serial number” of former employees. To facilitate the process, fax or mail the signed consent and release to the reference giver. When calling references, the interviewer can help break the ice by briefly sharing information about himself, the organization, and the job the candidate has applied for. Some employers even ask an applicant to contact referrers first to help ensure that they can actually get through to them.

4. Keep questions pertinent.

To obtain relevant and consistent information on applicants, develop a reference check form with a list of standard questions and require its use for all checks. At a minimum, the form should cover the basics including dates of employment, positions held, and pay rates. In addition, it should contain open-ended questions about skills, qualifications, strengths, weaknesses, work habits, and suitability for the position. The form also should include specific questions about performance issues and disciplinary actions, eligibility for rehire, and reasons for leaving.

5. Document responses, even if limited.

Keep an accurate written record of all your reference discussions to support your hiring decisions and to help protect against negligent hiring, defamation, and other legal claims. And, if the reference giver refuses to provide any information, document the request and the lack of cooperation.

(Download free Hiring model policy including HR best practices and legal background.)

Of course, reference checks are just one of many tools that you need to make a good hiring decision. You also should verify other information on a candidate’s resume or application (such as educational history pertinent to the job) and consider performing additional background checks (such as criminal, credit, and driving checks) if the nature of the job warrants these checks. In addition, you may want to conduct skills testing to further evaluate a candidate’s abilities. All of these steps will help you make more effective hiring decisions.

Regards,

Robin Thomas, J.D.
Personnel Policy Service, Inc.

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