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Policies & Procedures - A Guideline to Reference Checking

THE LANGUAGE USED IN THIS DOCUMENT DOES NOT CREATE AN EMPLOYMENT CONTRACT BETWEEN THE EMPLOYEE AND THE AGENCY. THIS DOCUMENT DOES NOT CREATE ANY CONTRACTUAL RIGHTS OR ENTITLEMENTS. THE AGENCY RESERVES THE RIGHT TO REVISE THE CONTENT OF THIS DOCUMENT, IN WHOLE OR IN PART. NO PROMISES OR ASSURANCES, WHETHER WRITTEN OR ORAL, WHICH ARE CONTRARY TO OR INCONSISTENT WITH THE TERMS OF THIS PARAGRAPH CREATE ANY CONTRACT OF EMPLOYMENT.

This review is not intended to serve as legal advice. This review is designed to provide only general information and is not a substitute for legal advice.

REQUESTS FOR EMPLOYEE INFORMATION:

South Carolina Statutory Protections:

Under South Carolina statute § 41-1-65, employers may provide information concerning current or former employees to prospective employers.

If a prospective employer makes an oral request, the employer may disclose the employee or former employee’s:

l dates of employment

l pay level

l wage history

If a prospective employer makes a written request, the employer may disclose the following information to which an employee or former employee may have access:

l written employee evaluations;

l official personnel notices that formally record the reasons for separation;

l whether the employee was voluntarily or involuntarily released from service and the reason for the separation; and

l information about job performance.

Employers who knowingly or recklessly release or disclose false information are not protected by this section.

EMPLOYMENT DECISIONS WHICH INVOLVE CREDIT REPORTS:

The Fair Credit Reporting Act

The Fair Credit Reporting Act regulates the collection and dissemination of certain consumer information. A "consumer report" is defined as any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for employment, promotion, reassignment, or retention as an employee.

If a report of this nature is sought through the resources of a consumer reporting agency, there are several requirements for the employer to adhere to:

  1. The employer must make a clear and conspicuous written disclosure to the applicant before the report is obtained, in a document that consists solely of the disclosure, that a consumer report may be used in a the employment decision.
  2. The employer must obtain prior written authorization from the applicant before requesting a report from the consumer reporting agency.
  3. The employer must also certify to the credit reporting agency that: 1) the above steps have been followed, 2) the information being obtained will not be used in violation of any federal or state equal opportunity law or regulation, and 3) if any adverse action is to be taken based on the consumer report, a copy of the report, and a summary of the consumer’s rights will be provided to the consumer.

After the employer receives the report, if the employment decision may be based even in part on the results of the credit report, the employer is required to do the following:

  1. Before taking an adverse action, the employer must provide the applicant with a pre-adverse action disclosure which includes a copy of the report as well as the summary of consumer’s rights. The consumer reporting agency is required to provide both documents when reports are obtained for employment purposes.
  2. After taking the adverse action, the employer must give the applicant notice – orally, in writing, or electronically – that the action has been taken. This adverse action notice must include:

    l the name, address, and phone number of the consumer reporting agency that supplied the report;

    l a statement that the consumer reporting agency that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it; and

    l a notice of the individual’s right to dispute the accuracy or completeness of any information the agency furnished, and his or her right to an additional free consumer report from the agency upon request within 60 days.

A right of action is provided against the user of credit information as well as against the consumer reporting agency for failure to comply with the Act. Only initiate this type of investigation if you have a direct job relevant reason for doing so.

POTENTIAL PROBLEMS IN GIVING REFERENCES:

The following list includes potential problems that could lead to a civil lawsuit by an employee. If any questions or concerns arise concerning these potential problems, consult the agency’s legal counsel.

Defamation – includes written or oral information shared with another person that is false, harms the employee’s reputation, and lowers his or her status in the estimation of the community.

Employee privacy issues – includes public disclosure of private facts that embarrass the employee and are of no legitimate concern to those to whom they are directed.

To avoid the problems above, it is important generally to disclose private information only to those with a legitimate need to know. If it is unclear whether it is appropriate to make a disclosure to the person requesting the information, try to delay any disclosures until the issue can be resolved with input from your legal counsel.

Negligent hiring – Some jurisdictions recognize the tort of negligent hiring which imposes liability on an employer who fails to discover an employee’s dangerous tendencies and, as a result, a third party is injured. Employers have a duty to conduct a minimal investigation in order to discover such tendencies as they relate to the employee’s position. For example, an employer may not be required to investigate previous DUIs if the employee’s position does not include driving a state vehicle. Any questions pertaining to relevant investigations should be directed to legal counsel.

Title VII issues

l Adverse Impact – Statistics have shown that employment decisions based on credit ratings, home ownership, and other economic indicators tend to discriminate against women and minorities since both groups have in the past been denied equal credit opportunities. Similarly, many State and Federal anti-discrimination laws prohibit inquiries into an applicant’s arrest record as having a disparate impact on minorities. Using criminal convictions as a determining factor in employment decisions is considered more appropriate than arrest records. However, even with convictions, the employer should take into account the nature, severity, date and disposition of the crime and conviction.

l Retaliation – Under Title VII, employers are prohibited from retaliating against employees who engage in "protected activity" which includes filing a discrimination claim against the employer. Retaliatory activity in giving references includes revealing to prospective employers that a former employee filed a discrimination claim or giving a negative reference because the employee filed the claim.

GIVING REFERENCE INFORMATION:

An article in HR Magazine¹ offered the following tips:

l Establish a clear policy on how to provide information to other employers, including who is authorized to release information. Build a file of any share reference statements.

l Be consistent in the type of information conveyed.

l When someone telephones asking for a reference, make sure you are speaking to someone with a legitimate right to know. Ask for reference requests in writing on company letter head, or a take a telephone number and call back.

l Keep a written record of who gives references, to whom and when.

l Give references only if the employee in question has provided a written release.

l Convey only job-related information.

l Make sure the information is factual and objective.

l Don’t be malicious.

l Answer questions but don’t volunteer opinions.

l Whenever possible, put the reference in writing to help maintain control over what is communicated.

l If the request concerns an employee you think is dangerous, talk with agency counsel about what to say and how.

¹ Jane Easter Bahls, "Available upon Request", Focus - Supplement to HR Magazine 2, 3 (Jan. 1999)

Please remember these are only recommendations. If you have any questions, please consult your agency legal counsel.

SEEKING REFERENCE INFORMATION:

A company’s obligation to check references varies with the position the employee will assume. If the employee will be in a position to endanger others, then the need to check references is greatest.

Here are some points to keep in mind when checking references. Make sure you have a signed release from the applicant giving consent for you to contact previous employers, educational institutions, and other pertinent agencies and individuals. Keep your questions job related and specific. Seek a factual basis for any opinions given. Finally, raise concerns about the applicant yourself. This may encourage the reference to provide information they otherwise might not have brought up.

Possible areas of investigation (if relevant to the position applied for):

l Previous employment. Carefully document reference information. Information such as whom you contacted (title, work relationship to applicant), what you asked the individual, and what the response was, etc. Verify dates of employment, job title, responsibilities and salary (if possible). Of course, you may also question the reference about the applicant’s job skills, general approach to the job, attendance record, ability to work with others, communication skills, and how the applicant’s employment ended. Keep in mind that the same State and Federal laws governing the interviewing process cover reference checking as well. (Inquiries into medical history being prohibited by the Americans with Disabilities Act, for example.)

l Education credentials. Most colleges and universities will verify this information over the phone if you have the dates of attendance, applicant’s name and social security number. If the school will not do this, require the applicant to have the school send an official transcript to you.

l Licenses, registrations, or certificates. Make sure they are current. Ask whether any complaints have been filed or disciplinary actions have been taken against this applicant.

l Military experience. The easiest way to verify military experience is to require the DD-214 discharge form which lists the latest assignment, job title, etc. For applicants with many years of service, several DD-214 forms may be required to cover the various time periods, assignments, etc.

l Credit history. See requirements of the Fair Credit Reporting Act. Please remember that this type of investigation should only be done if it is relevant to the position.

l Driving record. An applicant’s driving record can be obtained by contacting the Highway Department with the applicant’s driver’s license number.

l Criminal record. For a fee, SLED can conduct a criminal check if you have the applicant’s full name, social security number, and birth date.

For more information about this Guidebook, contact the Human Resources Department.

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