Many employers conduct reference checks on applicants to help make informed hiring decisions. If you intend to do so, here are some rules and best practices to consider.

1. Notify applicants.

In job postings and interviews, inform applicants that you conduct reference checks. Many employers gather reference information during the application process or ask for it after a conditional job offer has been extended.

2. Conduct reference checks after extending a conditional offer.

It is generally considered a best practice to wait until you have extended a conditional offer of employment before conducting reference checks. If you perform reference checks earlier in the hiring process, make sure you are consistent about the timing. And, confirm that you can lawfully obtain the information you are requesting before extending an offer.

3. Obtain authorization.

Prior to checking a potential employee's references, obtain and retain written authorization from the individual. Ask applicants to sign a form authorizing their former employer to disclose job-related information to your company.

4. Decide what information to request.

Reference checks for all similarly situated candidates generally should be subject to the same set of questions. During the hiring process, many employers use reference checks to verify information provided in employment applications, resumes and interviews. For instance, they may use the reference check to confirm dates of employment, positions held, reasons for leaving and eligibility for rehire. Most employers are willing to disclose this type of information, but may be less inclined to provide information on performance- or conduct-related issues. If you decide to seek information beyond dates of employment, positions held, reasons for leaving, and eligibility for rehire, use the job description to draft specific questions related to the job for which you are hiring.

5. Request and use only job-related information.

Reference checks for all similarly situated candidates must be subject to the same set of questions and should only seek job-related information. Never ask for or use information that is protected by federal, state or local law. For instance, several states and local jurisdictions restrict or prohibit employers from asking a former employer about a candidate's pay history. Even if you avoid asking off-limit questions, a former employer may inadvertently disclose protected information (e.g., the individual's age, national origin, family status, etc.). In these cases, disregard such information when making a hiring decision.

6. Talk to references directly.

It is a best practice to contact a reference directly via phone, even if a job candidate provides a letter from the reference. Many employers check three references. These should generally be professional references from previous employers. Ideally, the reference should be someone who has directly supervised the employee. On the phone, be sure to verify the reference's role in relation to the applicant.

7. Comply with Fair Credit Reporting Act if using a third party.

If you hire another company to perform certain background or reference checks, you must make sure you comply with the Fair Credit Reporting Act (FCRA). Among other things, the FCRA requires that employers provide written notification to, and obtain authorization from, any individual subject to a background investigation. The FCRA also has very specific guidelines employers must follow when taking adverse action against an individual (e.g., failing to hire) based on the results of the investigation. Several states have their own laws similar to the FCRA, so it is important to review applicable state laws to ensure compliance.

8. Document.

Retain records supporting your hiring decision, including reference check information. Document when reference checks were conducted, who was contacted, and the job-related information gathered and used to make the hiring decision.

Conclusion:

If you intend to conduct reference checks, make sure you have policies and procedures in place to help manage the process and promote consistency.