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Although there are differences in state laws, in general the following is true with regard to reference checking:

1. Even in states which give employees access to their personnel files (most states do), written reference checks need not be included.

2. The Fair Credit Reporting ACT (FCRA) regards reference checks to be Investigative Consumer Reports, and has notification requirements.  DiligencePartners requires a release from the individual being checked as to the specific people who will be contacted, and/or a general release authorizing the contact of anyone regardless of whether specifically named or not.

3. With regard to the person providing the reference information, almost all states protect that individual from being sued if the information provided is true, even if that information results in the candidate not being hired.

4. To protect against negligent hiring claims, employers must conduct thorough reference checks.  A claim of negligent hiring can result when an employer hires someone, that individual subsequently takes some action which harms a third party in some way, and it turns out that the individual had engaged in such harmful behavior previously and the employer had made no reasonable effort to uncover that fact before the hiring decision.  This is the reason that many employers conduct criminal background checks before hiring decisions are finalized.

5. There also is a newer concept called negligent referral.  Essentially this means that a prior employer may be liable if inaccurately positive reference checks, or reference checks which omit highly negative behavioral information, are provided.  The premise here is that employers have an obligation to divulge anything about a prior employee which could prevent harm from coming to others.