Tips for Avoiding Liability when it Comes to Job References and Background Checks

This article is excerpted from Especially for Texas Employers.

Texas law protects from defamation liability an employer who releases information about a current or former employee to a prospective new employer, unless “the information disclosed was known by that employer to be false at the time the disclosure was made or that the disclosure was made with malice or in reckless disregard for the truth or falsity of the information disclosed.”

The question that most employers have is how to put the law into practice. Following are some practical tips for how to avoid liability and for how not to tempt employees to try to file lawsuits.

Point 1: Be Careful Over The Phone

As a general rule, it is not a good idea to give job reference information over the phone if someone “cold-calls” you, unless you are absolutely certain who is calling and why. The reason is that you do not know who is calling and, more importantly, why they are calling. The person could be a representative of a prospective new employer, but they could just as easily be a private investigator hired by the ex-employee to see if you say something bad about their client, a debt collector trying to track your former employee down, a stalker or identity thief, a disgruntled ex-spouse or significant other, or even a nosy neighbor. A good general practice is to respond to calls about employees with something like “I’m sorry, but we do not release information about current or former employees over the phone. However, we will be glad to furnish any information that your applicant authorizes us in writing to release to you.” Then, suggest that the caller get the applicant to sign a release/authorization form and send it to your company.

Point 2: Just the Facts, Please

When giving a job reference, release only factual information. Factual information is something you can prove, either with witnesses or documentation. Facts do not include opinions, value judgments, or moral criticism.

Point 3: Supply Only What Is Requested

In addition, it is generally a good idea to provide only what is requested. Unless there is a compelling need to do so, try not to volunteer additional things that are not connected to the information requested by a prospective new employer.

Point 4: Tell the Truth

You may have heard that “truth is an absolute defense to a defamation lawsuit.” The fact is, that’s true. Tell a prospective new employer only what you know to be true. Telling true facts has been protected in the past by court decisions and is now protected by the new statute.

Point 5: Avoid Inflammatory Terms

Although embellishing a story with vivid terms and frank opinions is human nature, it should be avoided when giving job references. Inflammatory terms can make a person feel they are being unfairly attacked and can tempt a person to seek an attorney. Use points 2 and 4 above to combine facts with truth, as illustrated in the examples below:

Inflammatory: “We fired Joe for stealing.”

Non-inflammatory: “We discharged Joe for failing to properly account for items entrusted to him. Items A and B were checked out to him, they turned up missing, and he failed to give a satisfactory explanation for what happened to them. Under our policy, that was a dischargeable offense.”

Inflammatory: “Jane was fired for using drugs. We don’t tolerate druggies here.”

Non-inflammatory: “Jane failed a drug test on (date). The initial positive result was confirmed. Medical review of the result revealed no satisfactory explanation for the presence of the substance that was found. Employees who fail a drug test under such circumstances are subject to termination.”

Inflammatory: “Frank was terminated for sexually harassing an employee.”

Non-inflammatory: “Frank was terminated for violating our policy prohibiting harassment in the workplace.”

There are many other situations in which inflammatory terms might be used and in which it might be better to tone the language down. The main thing is to express the facts in a way that gets the idea across without sounding like name-calling or moral judgment. As in most other areas of employment relations, the more an employee feels that he or she is being fairly treated, the less likely they will be to think they have to hire an attorney or complain to a government agency in order to vindicate themselves.

Use a Written Release Form

It is well-known that it can be difficult to get a usable job reference on an applicant from prior employers. Past employers are often reticent out of fear of defamation lawsuits, or they may suspect that a person requesting information is not really a prospective new employer. It is especially difficult to get usable information out of a “cold call” to another company over the phone. Using a preprinted, fill-in-the-blank form such as this one can help overcome the reluctance or fear often felt by people asked to give a job reference and can give you a better chance of getting a useful, candid response. See the explanatory note following the sample form.

Other Ways to Obtain Usable Reference or Background Information

If you are an employer that is considering hiring an applicant, sometimes you have to be like an investigator and try other techniques. In addition to using the form hyperlinked above, you can ask the applicant to give you the contact information for his or her immediate supervisor and try to talk with that person. If that supervisor has been properly trained, they will refer your call to the human resources staff, but sometimes you will find someone who is not trained that well and will give you more insight into the applicant’s “real” employment history than you might otherwise get from the HR staff at that company. Second, ask the applicant to give you the name and contact information for at least one third party (customer, vendor, government regulator) who can give a statement as to the applicant’s work or expertise. Such parties will sometimes give valuable information concerning an applicant (and sometimes not – the main point is that there is nothing to lose by asking).

You can also hire an outside professional investigator to do a thorough reference check, as long as you satisfy the formalities under the Fair Credit Reporting Act. In order to do a background or reference check under the FCRA, an employer must first notify the applicant that such a check will be done, and then must obtain the applicant’s written permission to perform the check. If the applicant refuses to sign such a form, you have the option of telling the applicant that the application process is at an end, or, if you are already satisfied with what you have been able to find out, you can opt to hire the individual without a more detailed check being done.

EEOC Issues with Background Checks

Sometimes employers will turn down an applicant as the result of a credit check or an unfavorable report on an applicant’s criminal history. Aside from the FCRA concerns noted above, an employer needs to worry about the potential EEOC issues involved. Basically, EEOC takes the position that because statistical evidence shows that a higher percentage of minorities than non-minorities has had financial or criminal history problems in the past, taking an adverse job action based upon such factors has an disproportionate and unfair impact (in EEOC terms, “disparate impact”) upon minorities, and the burden will be on the employer to show a legitimate, job-related reason for taking the adverse job action.

EEOC expects employers, prior to turning someone down for a job or promotion who has had an unfavorable credit or criminal history report, to do an individualized job-relatedness determination. That means that before turning down someone for a job on the basis of a credit report or criminal history problem, the employer must be able to show that it considered the specific problem and determined that it would not be a good idea or prudent course of action to hire that specific person for a particular position.

IIAT endorses Trak-1 for Background Screening Services

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