Legal Issues for HR Professionals: Reference Checking/Background Investigations

• DOI: 10.1177/009102600703600106
• Date: 01 March 2007
• Published date: 01 March 2007
• Subject Matter: Article

Legal Issues for HR
Professionals: Reference
Checking/Background
Investigations
By William J. Woska, J.D.
Employers have a legal duty to protect their employees, customers, clients and
visitors from injury caused by employees that the employer knows or should have
known poses a risk to others. When an employer breaches this duty, they may be
liable for damages under the tort of negligent hiring. Reference checking performed
by employers is essential in satisfying their legal obligations. However, human
resources specialists often find themselves in a quandary when reference checking
becomes an issue. Confusion often results from legal advice to attempt to obtain as
much information as possible on a potential hire while providing as little information
as possible on a current employee because of the possibility of lawsuits. This article
addresses issues the employer must consider when conducting reference checks
and background investigations.
Human resources specialists may become uncomfortable when the term refer-
ence checking enters a conversation because of the difficulty in obtaining
information from current or former employers. Employers may do some
investigation into a potential employee’s background in order to protect against neg-
ligent employment litigation. However, because of the reluctance of employers to pro-
vide information about an individual’s employment history, the possibility of lawsuits,
the time involved, and other related reasons, it is not unusual for employers not to
conduct thorough reference checks.
Employers have a duty to protect their employees, customers, clients, and visi-
tors from injury caused by employees the employer knows, or should have known,
pose a risk to others. This duty arises from the common law and is breached by
employers who fail to exercise reasonable care to ensure that workers and customers
are free from the risk of harm that may be inflicted by unfit employees.1 If employers
breach this duty, they may be liable for damages under the tort of negligent hiring.
Employers are exposed to lawsuits for defamation of character and invasion of
privacy claims when they provide information about current or former employees to
other employers seeking job references. In a number of states it is considered privi-
leged communication when an employer communicates information about the job
performance or qualifications of a current or former employee upon the request of a
prospective employer. In California, a “qualified privilege” has been established when
Public Personnel Management Volume 36 No. 1 Spring 2007
79

---

a prospective employer requests information from a former employer, and the former
employer acts without malice providing truthful job-related information. The former
employee cannot later recover from the former employer under a defamation theory.2
The failure by employers to either do or adequately complete reference checks
or background investigations has caused considerable embarrassment and liability to
the parties involved. Two recent high profile situations receiving national publicity
illustrate the problem: (1) In May of 2002 Sandra Baldwin resigned as president of the
United States Olympic Committee after admitting that she lied about her academic
credentials by claiming that she had a doctorate from Arizona State University. She has
since reported that she did not complete her dissertation.3 (2) George O’Leary was
hired as the head football coach at the University of Notre Dame in December 2001.
O’Leary had been the head coach at Georgia Tech prior to being appointed to his new
position. However, several days after his appointment it was found that O’Leary made
untrue statements on his resume. Five days after his appointment, he resigned.4
Another incident several years ago involved United States Senator Barbara Boxer
of California. Boxer’s office did not screen out an individual with a record of threats
and illegal gun use from working as a receptionist in her San Francisco office. The
police subsequently arrested the individual at work for carrying a 9mm Beretta hand-
gun and mushrooming bullets—the same kind of bullets that were used to kill eight
people at 101 California Street in San Francisco in 1993. Boxer’s receptionist explained
to the investigating officers that he was investigating UFOs for the CIA.5
Human resources professionals are responsible for providing the best qualified
candidates for vacant positions. The final selection must include a comprehensive
background investigation for higher level and other sensitive positions within the
workforce. This article addresses many of the legal and related issues involving refer-
ence checking and background investigations. Situations resulting in liability to the
employer when background investigations were either inadequate or not done are
provided to assist the human resources professional in better understanding possible
repercussions. Additionally, the issue of negligent employment practices is addressed
to illustrate the relationship to reference checking and background investigations.
Finally, job related employment practices are discussed in detail to better emphasize
the nexus between the privacy rights of an individual and the employment process.
Reference Checking Considerations
Reference checking is a critical component of the hiring process for all new employ-
ees. It does not matter if the position to be filled is entry level or at the top of the
organization. Hiring someone who may otherwise be screened out through reference
interviews can be harmful to the organization.
Attorneys often advise employers to limit responses to reference inquiries to the
“basics” such as name, job title, and dates of employment to protect against litigation.
The “basic” employee information is also regularly provided with respect to employ-
ment verification for credit purposes. The purpose for advising limited reference infor-
mation is because of the possibility of lawsuits alleging defamation and/or invasion of
80
Public Personnel Management Volume 36 No. 1 Spring 2007

---

privacy if responses expand to other matters such as addressing performance related
issues. Additionally, if the current or former employee has been involved in any type
of adverse employment situation, retaliation may become an issue.
Employers often find themselves in a catch 22 as to legal advice concerning ref-
erence checking. They are encouraged by counsel to obtain as much information as
possible with respect to prospective employees. However, employers are also advised
to restrict the information they give in reference checks. The limitations involved with
obtaining and/or receiving reference information can be frustrating for both the
employer seeking to hire a qualified individual, and the individual who is applying for
the position who is unable to obtain a reference from a current or former employer
where s/he may have outstanding performance.
Reference checking and background investigations are essential in hiring com-
petent employees. An...