What are the best practices for allowing reference checks for terminated employees? - HR Insights

What are the best practices for allowing reference checks and/or letters of recommendation for terminated employees?

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Question:

A manager at my company recently provided a reference check for a previous employee. That employee called our HR department to complain, saying the reference check was negative and cost him the job, and threatened to take legal action. Thankfully the situation is resolved, but now our company is scrambling to put a policy into place, so this doesn’t happen again. What are the best practices for allowing reference checks and/or letters of recommendations for terminated employees?

Answer:

Reference checks and letters of recommendations, in regard to employment, are an increasingly outdated practice. While employment verification is a common practice, providing more personalized information about an employee’s performance at a specific company is not recommended. It can lead to potential complaints, even lawsuits, and doesn’t usually provide meaningful information to a prospective employer. The only exception for this is if a previous employee requests a letter of recommendation for an educational institution, which does not have the same employment considerations.

Long Answer

It’s important to delineate between a reference check, a letter of recommendation, and employment verification:

Employment verification is when an employer reaches out to a prospective employee’s former place of work, in order to confirm that employment information provided on an employee’s resume is accurate. This is a common practice, and it’s typical for employers only verify a former employee’s job title and dates of employment.

Reference checks have a lot of crossover with employment verification, but with the added goal of evaluating a prospective employee’s performance at their previous job. This can be in the form of a survey, or a brief paragraph detailing an employee’s performance.

Letters of recommendations are like reference checks, where a former employer or manager provides feedback on their previous employee's performance or character, but it is generally something the employee requests themselves in order to enhance their resume, not a requirement of the prospective employer.

Employment verification is best practice; limiting verification to dates of employment and job title only is best practice. This is to prevent bias, if an employer shares more information, especially if that information is performance related and potentially subjective, they run the risk of legal action. However, these risks are relatively low, as it’s not common practice to divulge such information when verifying employment.

When a prospective employer or the former employee themselves reaches out for a letter of recommendation or reference, it is important that the information provided be factual and not based on opinion or be a result of retaliation or bias. Incorrect reference or employment verification information may result in a former employee losing out on a job opportunity or even go as far as legal action against the employer for defamation or wrongful termination.

Best practice is for any verification of employment, reference check, or letter of recommendation be handled by HR and to stick to the bare minimum release of information. If your company allows managers to write a letter of recommendation for former or exiting employees, it is also important to ensure that it is clear that the letter is the manager’s opinion and not the stance of the employer.

Now, there is one exception to this. Some colleges or other higher educations require a letter of recommendation. If you have an employee that is a student, and asks for a letter of recommendation, there is no issue in providing one, because it’s outside the realm of employment.

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What are the best practices for allowing reference checks and/or letters of recommendation for terminated employees?

Please note: This information is not legal advice and may not reflect specific state or local requirements.