Should Recruiters Check References?

Got a legal issue you’re grappling with? Is your fee in jeopardy? Jeff Allen invites questions from recruiters and owners. He’ll answer your toughest legal questions. Visit his website or email him here.

Hi Jeff,

I’m a long time reader of The Fordyce Letter and your fantastic columns.

I am a member of the National Insurance Recruiters Association. We have been having a discussion among our membership about third-party firms checking references for clients.

A large majority of membership say that they do check references at some point in the recruitment process on the candidates they bring into actual interviews. I suggested they NOT do this, as it can bind them to the candidate and their actions moving forward and possibly draw them into litigation should something go wrong in the future with their employment.

What are you thoughts on checking references?

Thank you!

Jeff Responds

Hi Steve,

Delighted to help our friends in the NIRA (National Insurance Recruiters Association)!

Before we begin the all-important reference checking business,

1. Go to www.placementlaw.com.
2. Click the Placement Manager’s Law Quiz button in the middle of the bottom row.
3. Take the PMLQ.
4. Click the Placement Law Language Quiz button next on the bottom row.
5. Take the PLLQ.
6. Click the Answers to Placement Law Quizzes button at the end of the bottom row.
7. Grade yourself on the PMLQ and PLLQ.

Now that you’re just too hip, here we go:

There is no limitation on the pre-employment references that can be contacted unless the candidate specifically requests this. However, no reference checking whatsoever should be done without the written consent of the candidate. The candidate also has an absolute right to any reference checks that are forwarded to a client.

I Recommend Checking

I highly recommend reference checking when you’re actively working a candidate. That’s why I wrote the only book of its kind, The Perfect Job Reference. That’s also why it was a bestseller and remains one of the most requested library references on the shelves.

The failure to check references before a sendout – or not do it thoroughly enough – results in some very nasty disputes. Legally they include placement malpractice (negligence), breach of fiduciary duty (failure to protect the client), fraud (intentional misrepresentation) and even conspiracy to defraud (with the candidate) alleged by damaged clients. Please don’t rely on their reference checking. You can be sure they won’t when they come after you – big time.

Since so many NIRA members are former insurance execs, they tend to think that E&O (errors and omissions) insurance covers reference-checking “errors” and “omissions.” Theoretically, they’re right.

Deciding Is Intentional

Only that’s not all that will be alleged by disgruntled employers and candidates. The money is in the allegations of intentional wrongdoing. “Terrors” and “commissions.” They’re not covered by any insurance.

So count on that being the focus of any threat or actual lawsuit. Also count on punitive (to punish) and exemplary (to set an example) damages (in an unlimited amount in the discretion of the judge or jury) being alleged.

Then count on any E&O carrier writing you a “reservation of rights” letter telling you to forget about any coverage for intentional acts. What’s intentional? Deciding to send someone out without checking his representations? Of course! “Deciding” is intentional!

Fortunately, a majority of states have recognized a privilege to protect those who obtain information about a prospective employee on behalf of a client. This was acknowledged in an oft-cited Illinois case involving a nurse’s registry. Judge v. Rockford Memorial Hospital, 17 IllApp2d 161, 217 P2d 687.

Not just any consent in writing from the candidate will do. It must be carefully drafted, current and airtight. Otherwise, you will run into invasion of privacy allegations (punitive and exemplary damages stuff) if you pass any of the information along to a client.

So as my gift to NIRA and the rest of the Fordyce fans looking to protect themselves, I’m going to send you our candidate Reference Check Authorization and Release. Keep in mind that the statutes, cases and administrative rulings at the federal level and in each of the states change. So always check with your lawyer for updates.

It’s too long to include in a JOC column, so to open the gift:

1. Go to www.placementlaw.com.
2. Click the red JEFF’S ON CALL! button.
3. Type Reference Check Authorization and Release in the Subject field.
4. Click Send.

I’ll reply with the Authorization and Release.

Thanks, Steve!

Jeff