You pick up the telephone and there’s someone on the other end asking about a former employee. It sounds like a human resource manager doing a standard reference check. But do you really know who’s calling?
The person could be a hired gun from a firm that specializes in contacting employers, pretending to ask about references but in reality trying to gather ammunition for a defamation lawsuit. How you handle the request for information can mean the difference between side-stepping a problem or facing a costly claim.
A New Trend
Disgruntled ex-employees are increasingly looking for help in finding out what their former bosses are saying about them. Sometimes the worker consults a lawyer who in turn may hire a private investigator to make phony reference calls.
A cottage industry also seems to be springing up of businesses who offer their services directly to employees who want to check up on past employers. One such company that has received publicity recently is called Documented Reference Check (DRC), based in Southern California.
How Reference Checkers Work
Although DRC owner Michael Rankin would not confirm his exact methods of operation, the firm reportedly has a number of subsidiary or shell companies whose employees do the reference checks. These entities have different names, addresses, telephone numbers, fax lines and letterhead. They’re designed to look and sound like potential employers-but they’re not.
The reference checks are conducted over the telephone or in writing if necessary. The inquiries are aimed at a ‘target’-the person the ex-employee thinks is most likely to be both negative and talkative. For a basic fee of $79, the former worker receives a sworn transcript of what that person said about them. Armed with this information, the former employee can then threaten to sue the employer for defamation in the hope of extracting a quick settlement.
Rankin says he uses stenographers to take down the conversations-thus avoiding the need for tape recording-which is illegal in many states, including California.
Rankin also told CEA he doesn’t keep track of the number or amounts of the settlements or jury verdicts his company has helped ex-employees win. But DRC’s marketing materials tout several large defamation awards against employers.
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If you get a call for a reference check, you probably won’t be able to tell immediately whether you’re talking to a bona fide prospective employer or your former employee’s hired stand-in. But here are some suggestions on how to reduce your chance of problems:
- Stick to a conservative job reference policy. The traditional rule is still the best. Confirm only job title and dates of employment. And don’t even give out this information without the employee’s written consent.
Although there is a California law that purports to protect employers who provide accurate job references in good faith, it doesn’t offer the full protection employers need. Employees can still sue you and accuse you of making statements about them maliciously. As a result, despite the law, you can end up spending a lot of money defending yourself. (See CEA November 1994.)
- Ask for more information.
Try to verify the legitimacy of the request by getting the name of the caller, the company they work for, their title, the telephone number and the position the former employee is seeking. Also, be on the alert if the person says, ‘I have an application in front of me from your former employee, can you tell me —-?’ They may not be talking about an employment application, but the form the employee filled out with DRC titled ‘Application for Reference Check.’
- Get it in writing and put it in writing. Only respond to written requests. Insist on a signed authorization from the former employee releasing you from liability for providing information. (See CEA April 1996.) And put your response in writing. That way there will be no doubt about what you said.
- Assign a designated person. One of the biggest risks for employers is that someone who is not properly trained, doesn’t know all the facts, or is a hostile co-worker or supervisor will respond inappropriately to a request for information. Therefore, always designate one person or department to process inquiries about former employees.
Finally, periodically remind employees and supervisors of your policy. Make sure everyone knows they’re not allowed to give out information, they should never speak to anyone about former employees, and that doing so is grounds for discipline or termination.