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8 Rules and Best Practices for Reference Checks

Many employers use reference checks to help make informed hiring decisions. Whether you're conducting a reference check or are asked to provide a reference for a former employee, make sure you have policies and procedures in place to manage the process and consider these best practices:

#1: Timing

It's generally considered a best practice to wait until you have extended a conditional offer of employment before conducting reference checks. If your company performs reference checks earlier in the hiring process, make sure you're consistent about the timing and confirm that you can lawfully obtain the information you're requesting before extending an offer.

#2: Obtain Authorization

Some states require written authorization from the individual before checking a reference and/or releasing information (and some have specific rules for these authorizations). Absent a specific requirement, it's still a best practice to obtain written authorization. When seeking a reference, ask applicants to sign a form authorizing their former employer to disclose job-related information to your company. When providing a reference, some employers choose to obtain a departing employee's authorization at the time of separation. If a prospective employer contacts you and you don't have authorization, have the former employee contact you to provide authorization.

#3: Verify Applicant Information

Many employers use reference checks to verify information provided in employment applications, resumes, and interviews. When you contact a reference, confirm dates of employment and positions held. While most employers are willing to disclose this type of information, some may be less inclined to provide information on performance- or conduct-related issues.

Reference checks for all similarly situated candidates should generally 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, such as use of job-protected leave. Even if you only ask for strictly job-related information, it's possible a former employer may inadvertently disclose protected information (such as the individual's age, national origin, or family status). Never use this information when making a hiring decision.

#4: Providing Information About a Former Employee

To help ensure consistency, many employers designate a single individual (such as an HR representative) to handle all reference requests. In such cases, supervisors and employees should be instructed to direct all reference inquiries to the designated individual. They should be trained on how to provide references in accordance with company policy and federal, state, and local laws, which may have restrictions on the types of information that may be disclosed. It's a best practice to only provide factual and objective information about former employees, such as dates of employment and positions held. If you choose to provide more information, make sure you are permitted by law to do so and the information is accurate and job-related. Additionally, provide the same types of information about all former employees.

Be particularly sensitive to the risks associated with providing a negative reference. Before disclosing negative job-related information, make sure you thoroughly documented the issue at the time it occurred. Several states have enacted laws to help protect employers who disclose information about a former employee in good faith. For example, in the wake of recent high-profile harassment cases, some states enacted legislation to offer some form of protection to employers that disclose information about alleged misconduct. Consult legal counsel on the risks of disclosing (or failing to disclose) information related to alleged misconduct in reference checks.

#5: Understand Bans on Salary History Inquiries

Traditionally, asking about an applicant's pay history has been a relatively common practice, but over the past few years several states and local jurisdictions have enacted laws that prohibit employers from asking for this information. Even in the absence of a specific ban on these types of requests, be sure to follow all applicable pay equity laws. For example, in some jurisdictions, prior pay cannot be used to justify pay differentials between men and women.

#6: Inform Employees What Information You Will Provide

Let employees know what type of information the company will provide if asked to provide a reference. This can be included in a written policy and within authorization forms. Employers may also choose to re-communicate their policy to departing employees.

#7: Comply with Blacklisting Laws

Some states have enacted laws that prohibit employers from "blacklisting" former employees. In other words, these states prohibit employers from intentionally trying to prevent a former employee from obtaining other employment.

#8: Document Reference Checks

When conducting a reference check or acting as a reference, it's a best practice to document the name and title of the person with whom you spoke, the date of the conversation, and what job-related information was given or received.

Conclusion:

Conduct and obtain references checks in accordance with federal, state, and local laws as well as company policy.

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