Risky Business: Part Two
A Primer on Reference Checking

Most HR professionals agree that one of the most important methods to verify a candidate’s past work performance, experience, and overall qualifications is to talk to his former employer. Checking references, however, can be a frustrating process. As we discussed in Part One, many employers will confirm only basic information about a candidate because they are concerned about defamation or other claims. Employers that do not check up on these references, though, may find themselves with an even bigger problem: negligent hiring claims. To help HR professionals get the most out of their checks, this article explores the negligent hiring threat and gives practical guidance for getting more information about candidates.

Former employers often are the only source available to verify the candidate’s actual work experience and abilities, and they may provide information missing from the resume. References also can confirm why a candidate was terminated or reveal past conduct problems, such as work-related incidents involving dishonesty, theft, or harassment. Using this information, employers can make more accurate hiring decisions and, as a result, reduce turnover costs. Even more importantly, these checks can help protect employers against negligent hiring claims.

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Under the theory of negligent hiring, an employer may be liable for the future violent acts or wrongdoing of its employees if it did not investigate adequately their backgrounds or qualifications. Negligent hiring claims often involve employees who are in a position to pose a threat of injury to the public, such as a driver or deliveryperson, and who subsequently attack an employee or third party, such as a client or customer. To establish negligent hiring, the harmed person generally must show: (1) that the employer did not exercise reasonable care in hiring the employee (for example, by talking to former employers); (2) that the employee had dangerous tendencies which would have been apparent if the employer had exercised reasonable care; and (3) that the employer placed the employee in a position to injure another person.

Most successful negligent hiring claims involve extreme and repugnant employee conduct, such as violent attacks by an employee on a customer or elaborate fraud schemes. However, as a general rule, the liability risk of negligent hiring claims far outweighs the inconvenience and resistance employers face in conducting reference checks.

Many employers also perform other types of background checks on candidates, including criminal records checks, credit checks, and driving records checks. Generally, these types of checks can provide important information about the candidate’s integrity, trustworthiness, and ability to perform the job. However, federal and state laws govern the use of these tests, and a full discussion of the restrictions on their use is beyond the scope of this article.

The need for solid reference information is clear, both from a legal and decisionmaking standpoint. The challenge is to overcome prior employers’ reluctance to give out the information. Many will verify only a previous employee’s position and employment dates, because they are worried about potential defamation claims by the former employee. Although these claims typically are difficult to win, the implicit threat of such legal action and big dollar awards is enough to keep employers from volunteering the needed reference information. HR professionals must overcome this obstacle.

The Editors suggest the following tips for making the most of a reference request:

Get specific information. Ask the candidate to give examples of past work performance with previous employers. Make it clear you will verify this information, and then use the material to formulate your questions to ask the previous employer.

Obtain written releases. Have the candidate give you written authorization to contact former employers and have the form release both you and the former employers from any legal liability based on information obtained during the check.

Reference checking can eliminate undesirable applicants, identify the best candidate, reduce turnover and training costs, and even prevent liability for negligent hiring. However, it is only one of the many necessary elements to making a good hiring decision. You also should check all information on a candidate’s resume or application, such as educational history, and consider performing other types of background checks if the nature of the job warrants these checks. In addition, skills testing and personality profiling may provide further information on the candidate’s suitability for the job. All of these steps help you make effective hiring decisions and avoid errors that lead to legal claims.