States Control How You Can Respond to Potential Employers of a Former Employee

As an employer, you might receive a series of questions from a company that is considering hiring a former employee. While you’re not obligated to respond to employment verifications from anyone other than the government, many companies are willing to provide some information because they also make similar requests for their job candidates. Before you respond, however, you must determine the information you’re legally permitted to disclose, which is primarily a function of the state in which you’re located. Next, you must determine the information you’ll disclose, which depends on the amount of potential liability you’re willing to accept.

There are no federal laws that govern what kind of information you can release about a former or current employee to a prospective employer. However, most states and some cities have enacted laws that govern the release of this information. Many state laws enable you to provide a wide range of information to a prospective employer but usually only with written consent from the employee. These laws also typically grant you immunity from liability unless you provide information you know is false or misleading, or you provide information without caring whether it might be false or misleading. In general, you have protection if you respond truthfully and in good faith.

The information you’re permitted to provide varies substantially from state to state. You can feel confident verifying factual information such as dates of employment and job titles. However, most states permit you to provide a much broader range of information when you have written consent from the employee. For example, in Arkansas, you can provide the past year’s drug and alcohol test results with appropriate written consent. In Louisiana, you can provide information about attendance, attitude, effort, awards, promotions and demotions. In California, you can provide information on job performance, termination reason, eligibility for rehire and knowledge, skills and abilities, but you cannot provide salary information. New York City also prohibits the disclosure of salary information to prospective employers.

Some states, such as Nebraska and Nevada, require that employers provide relevant employment information to employees and to third parties in a specific format called a “service letter” or a written statement. Companies typically provide employees with a service letter after they terminate and must use the service letter to fulfill employment verification requests from prospective employers.

The requirements for notifying employees also vary from state to state. In Texas, employers must generally provide a copy of written or verbal disclosures to the people to whom they were given within 10 days of fulfilling the requests. Other states, such as Colorado, enable a former employee to request a copy of the information disclosed but don’t require automatic notification.

There are even variations in the rules that define the permissible recipients of the information. Most states permit the release to a current or former employee as well as to a prospective employer with appropriate written consent from the employee. Wisconsin, however, also permits you to provide the information to a bondsman or surety agent.

Before you provide any information, you must be familiar with the appropriate state and city laws that affect these disclosures. Resources you can access include the state labor department Web pages or portals and your legal department. Nolo publishes a free reference that includes a state-by-state analysis of laws that affect references and statements by former employees.

Despite the specificity of state laws and the promise of immunity from liability, many organizations still limit the information they disclose out of concern over liability. The strategy with the least amount of risk is to only provide factual and verifiable data that doesn’t rely on opinion or judgement. This includes a limited set of data such as dates of employment, job titles and final salary (where permitted).

If you would like to be more helpful to prospective employers and your state provides immunity from liability, you can choose to add additional information from the list of data elements that your state law permits you to disclose. The answers to this group of questions are often based on opinion and judgment, such as termination reason, eligibility for rehire and comments on job performance.

A third category of questions might require you to make predictions about future events. Since you would have to guess at the answers to these questions, you probably should not answer them. Questions in this category include the likelihood of continued employment, the probability of a promotion and the amount of a future bonus payment.

Even when you adopt the strategy with the least risk and limit the information you disclose, there is still the possibility of liability for discrimination if you make exceptions to your policy on an individual basis. For example, if you decide to provide more in-depth information for employees who left voluntarily, but you don’t provide the same information for employees who were fired, you might be accused of discrimination if the group of employees who were fired has a greater representation of minority workers. Once you determine the rules, consistency is paramount.

If you feel overwhelmed by the amount of detailed knowledge or liability associated with employment verifications, you might want to explore outsourcing the process. An outsourcing provider typically already has an expert with the required knowledge and trained representatives who perform this type of work on a regular basis. It’s often possible to self-fund this process through fees that certain requesting organizations pay. It might be a chance to shift work to a third party for free!

Learn more about Employment and Income Verification Services.

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