arrowCrosschq Blog

Common Reference Checking Legal Issues

When hiring new employees, it’s important to rely on quality data in order to ensure that you are sourcing, hiring, and retaining the best possible candidates for your company or organization. 

A tried and true method for evaluating candidate caliber is the extensive (and sometimes unnecessarily grueling process of reference checking, which ensures that the applicant information presented to your company or organization is fully accurate and actionable. 

The Legality of Reference Checks

While there are many misconceptions about what can and can’t be asked of employee references, you may be surprised to learn that the references of prospective employees are allowed to reveal information extending beyond the confirmation and length of employment. 

However, despite this, many companies institute protective policies with the intent of limiting the potential of defamation or discrimination lawsuits. Companies also will have specific guidance around what former employees of a company can or can’t reveal, to protect unfair biases and ensure they are compliant with the legality of reference checks. 

Are there laws regulating reference checks? 

In order to keep the process fair and balanced, there have been several laws on reference checks for employment instituted, with the attempt of protecting employees from discrimination, while potential employers do their due diligence during the hiring process. 

 Improve new hire satisfaction by 26%.

Federal Laws for Reference Checks

Essentially, federal laws for the legality of reference checks assume that it is illegal for an employer to give a negative or false employment reference (or to refuse a reference) based upon an applicant’s ethnicity, race, religion, sex, gender identity, sexual orientation, pregnancy status, national origin, age (40 or older), disability, or medical information. 

It is up to the employer to check the negative references of potential applicants, to be sure that there is no discriminatory bias at play and that the employer is abiding by the laws on reference checks for employment. This is why it is always a good idea to ask for many references, in order to exclude bias that may come from one reference in particular. 

Staying on top of the legality of reference checks is paramount, otherwise, you could end up in hot water, legally, and ethically. 

State Laws for Reference Checks

You may be wondering, what can I legally ask when checking references at the state level? Beyond federal laws, it’s important to understand that there are different laws at the state level regarding what information an employer can or can’t provide. 

Some states are far stricter than others, and complying with state regulations is necessary to avoid making a mistake that would make a job reference question illegal.  

Legal issues when conducting reference checks

We all want to end discrimination in the workplace, but certain realities permeate our society, making the vigilance of the reference checking process something that must be a priority for your business or organization.

Discrimination in Reference Checking

It’s necessary to identify any bias or potentially discriminatory reference immediately and remove it from the reference process so that there is no chance of the reference being accepted and used in the decision-making process for a candidate.

It’s also important to note that there are questions you cannot ask references, such as protected class information. 

Protected class information covers many of the potential discrimination areas such as race, height, weight, financial information, citizenship status, and gender.

Protected class information might be revealed or uncovered in the reference checking process, and legally this can never impact the ultimate decision of the hiring process. 

 Increase diversity hiring by 32%

Often, companies who let information in these categories make their way into the reference process are falling prey to the natural disorganization and unstructured reference checking that is commonplace, when a system or service isn’t integrated to help. 

What Constitutes Bad Reference Checking?

Utilizing a system that is organized and streamlined is paramount to sourcing, hiring, and retaining quality employees. It’s necessary to avoid reference bias by using a structured system that collects a multitude of data points, in order to avoid negligent hires and negligent referrals. 

There’s a Better Way to Hire 

That’s where Crosschq comes in. Crosschq is a data-driven reference checking and talent analytics platform powered by its proprietary Talent Intelligence Cloud™ to help companies make better, informed business decisions through data.  

Crosschq 360 can help your business or organization source diverse new talent by taking unconscious bias out of the hiring process and remove the hassle of onboarding prospective new hires.

To learn how you can hire a better, more diverse team, schedule a demo with a Crosschq team expert here.

Mark Ko

by Mark Ko

Content Writer

Take the Guesswork
Out of Hiring

Schedule a demo now
ESTE_cropped este_sm cta_light