What Every Employee Needs to Know About Employment References

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While employment references are a popular subject for both media and water cooler discussion, much of the commentary actually misses the point. Employers now almost uniformly conduct reference checks before hiring a new employee, as well as periodically for current employees, to uncover potential resume fraud and/or for security reasons related to the employee's access to confidential financial and business information. Reference checks are nevertheless fraught with pitfalls, both for the potential and current employee subject to such investigations.

An employer who takes the process seriously often retains an independent firm to verify personal, work-related and/or professional references and/or to secure reports concerning credit and/or legal history. Some employers delegate reference checking to a staff member, who may or may not be a trained in this area and/or may not take his or her responsibilities seriously. For these and other reasons, reference checkers often take shortcuts that fail to comply with credit checking or privacy requirements imposed by federal and/or state law.

The Fair Credit Reporting Act applies to most reference checks. According to the FTC, the employer is required to secure informed consent and to advise the individual of any adverse information before taking action on what is learned. (There is separate article on this Website discussing this matter in greater depth.)

From the employee’s point of view, it is always wise to assume that the employer is going to conduct a full investigation into job references, credit history, and criminal/civil litigation history. In addition, reference checkers often go beyond the information that an employee voluntarily provides to the potential employer by using standard investigating techniques or using a credit, legal history or other report as a springboard for a follow-up inquiry.

When providing a resume, completing an employment or security application or answering questions during an interview, it is critical to provide full and accurate information. When in doubt, you should decline to provide requested information. The individual instead needs to state that he or she will gather, verify, and provide the requested information as soon as he or she can do so. This information should be provided by telephone or email with the employee keeping a copy of the same in the event that a problem arises.

In addition to verifying a potential employee’s job history, a reference check often focuses on securing the information needed to determine whether the employee fits into the new organization. This line of inquiry not only focuses on determining whether the employee possesses the knowledge, skills and abilities needed to do the job, but also on his or her work habits, personality characteristics, and/or past difficulties in dealing with work colleagues and superiors and/or third parties, such as customers. These inquiries may exceed accepted parameters of lawful inquiry – e.g., questions directed to family or personal matters that are gender-based or concern medical history in order to secure information relating to a prohibited subject of inquiry.

In responding to reference inquiries, many employers refuse to give out information beyond confirming the dates of employment, job held, and/or annual salary or hourly wage rate upon the separation of employment. Even if it is the policy of a company, governmental agency, or non-profit organization to give only this basic information, the reference checker may try to get additional information by asking a simple questions like, “Is this employee eligible for rehire" or “Would you hire the employee again if you had the opportunity to do so"? This question can lead to backdoor revelations of prior disputes or other work problems. Guarded responses, hesitancy, and/or inconsistent responses from the employer representative responding to this or other inquiries may raise questions that work against the applicant.

Reference checks are always problematic for a potential employee because he or she rarely learns anything specific about the nature and extent of any written or verbal responses provided by the former employer. The individual instead learns the bottom line only after the potential employer sends a form letter or email rejecting the employee’s application. In some instances, the potential employer will not even bother to respond – especially, when it learns adverse information it does not wish to disclose due to a pledge of confidentiality More often than not, the disappointed job applicant has to figure out that his or her former employer is giving bad, indifferent, or equivocal references after receiving negative responses or run-arounds from a number of potential jobs sources in which the interviews went well.

What can a disappointed job applicant do to protect his or her future employability and reputation? The best solution is to line up job references in advance of termination as part of an exit interview or as part of the consideration for signing a release of liability as part of a severance agreement. It is often wise for the individual to prepare a draft of the proposed reference letter and/or to work cooperatively with his or her superior or authorized company official to prepare an accurate and mutually acceptable document. Once a business, professional, or personal reference i s reduced to writing and signed, it is not very likely that the same individual will later depart from the agreed upon employment reference and bad-mouth the former employee. As an added precaution and courtesy, the former employee should call to let the former employer or supervisor know that he or she is likely to be contacted to provide an employment reference. If the employee is conducting the job search without the employer’s knowledge, it is wise to state in a cover letter or email and/or during any job interview that the applicant would like the employer to refrain from checking references until he or she can notify the employer and/or gives express permission to start the process In this situation, the applicant also needs to tell the potential employer exactly why he or she is asking to delay verification.

If individual believes that he or she has received a false or grossly unfair reference, there are a number of options available for achieving redress. First, the employee can hire a professional reference-checking service that works on behalf of employees and secure from this independent third party essentially the same type of information that a potential employer will receive during the reference checking process. There are several firms staffed by former human resources official available to provide this service at a reasonable cost. Second, the individual may wish to seek the advice of a lawyer as to whether the former employer has violated his or her rights under law. Third, the employee can file a discrimination or retaliation complaint with a fair employment practices agency (e.g. EEOC) if there is reason to believe that the former employer’s actions constitutes retaliation for his or her prior exercise of legally protected rights.

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Lawrence J. Sherman

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