Common Clauses

What can your Ex-Employers say during Reference Checks?

Dec 22, 2023

Reference checks are a common step of the interview process where previous employers are contacted to learn more about your work experience. Just as you might reach out to friends at a company you’re considering to learn ‘unfiltered’ information about what it’s really like, potential employers would like to do the same about you. What we’re focusing on this week are the legal boundaries companies must tread when providing such information. As a related topic, we recommend checking out our previous post on the legalities of Background Checks, where many of the same themes apply.

What do Reference Checks typically include?

Before we go into the laws, let’s review the common topics of what might be covered in a reference check (noting that not all the topics may be allowed in each state):

  1. Job Title/Description

  2. Job Performance

  3. Reasons for Termination/Departure

  4. Duration of Employment

  5. Pay Rate and Pay History

  6. Eligibility for Rehire

  7. Drug and Alcohol Test

  8. Acts of Violence or Harassment

  9. Qualifications

  10. Work Habits and Professional Conduct

  11. Disciplinary Actions

  12. Violations of the Law

  13. Awards, Promotions, and Demotions

  14. Attendance

Federal Laws for Reference Checks

The US Equal Employment Opportunity Commission (EEOC) states that “it is illegal for an employer to give a negative or false employment reference (or refuse to give a reference) because of a person's [protected classes]”. Furthermore, not only is it illegal to provide bad information on a discriminatory basis, it’s illegal to ask for any information around protected classes at all. Just like the interview process, reference checks should not be discussing your race, gender, marital status, or any other protected class.

For cases outside of discrimination, it’s still illegal to provide a reference that meets the bar for defamation (see US Code §4101 for a legal definition). While high profile defamation suits are often pitted against first amendment rights, the bar for defamation is a bit more clear for employee reference checks. If the reference contains knowingly false information that causes harm, it can qualify as defamation. However, reference checks made in good faith are typically ‘privileged’, or protected from defamation liability.

State Laws for Reference Checks

As is the case with many legal topics in the US, it’s at the state-level where things get nuanced and complicated. You can review all the specific state laws compiled by NOLO, but let’s look at a few examples here:

  1. California (Labor Code 1053 and Civil Code 47(c): Employers can request information about your performance, reason for departure, qualifications, and specifically the eligibility for rehire. This information is generally privileged if made in good faith and based on a reference check approved by the individual as opposed to a ‘backdoor’ reference check made without consent.

  2. Arkansas (Code § 11-3-204): Reference checks can only be provided with the individual’s written consent. The reference can include information such as the pay rate and wage history, last written performance evaluation, and drug or alcohol test results within 1 year.

  3. New York (Labor Law Section 194-a): In 2020, employers were banned from asking orally, or in writing, directly or indirectly, about an individuals salary, compensation, or benefits as part of a job application.

Company Rules for Reference Checks

If you review every state’s reference check laws, you might be surprised to see how many focus on protecting employers from defamation liability as opposed to protecting the individual. Reference checks open employers up to the risk of defamation lawsuits, so some companies actually have a no-reference policy. After all, companies aren’t legally required to provide a reference when asked, so check your company handbook to see if they’re conducted at all.

Reference checks can feel like a great way to boost your application portfolio, but can also catch you off guard depending on the questions that are asked, potentially without your consent. Make sure you are aware of that can and cannot be asked, and maintain a list of references that you are comfortable about (particularly for cases where references can only be conducted with your consent). This post is our last for 2023, so we wish everyone happy holiday and see you in the new year!

For advocacy and beyond,
The Ask Ginkgo Team

stay in the loop

Subscribe for Negotiation Tips.