The HR Policy on Reference Checks

Written by rowena odina
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The HR Policy on Reference Checks
A credit check may be part of the reference check for potential employees who may be in financial positions. (Erik Snyder/Lifesize/Getty Images)

Employers often conduct reference checks as part of the recruitment process to verify information provided by the candidate and determine suitability for employment. This includes contacting previous employers, obtaining records of education, criminal history and consumer credit, or getting professional and personal references. The human resources (HR) department may conduct the reference checks or outsource to a third party agency. Reference checks are critical for positions that involve leadership, financial responsibility or interaction with the public.


The primary purpose of reference checks is to verify the candidate's qualifications and fit for the job. The organisation avoids hiring staff with major performance and behaviour issues, protecting both itself and its employees. Effective reference checks help the company hire good candidates, reduce hiring costs and avoid hiring mistakes. They also prevent possible legal challenges due to poor hiring decisions. Good hires eventually contribute to the company's productivity and profitability.


HR usually initiates reference checks once a decision is made to hire a candidate. A job offer is often contingent on successful reference checks. Most companies do not allow candidates to start working until reference checks have been completed. If any discrepancies or negative information show up, then the hiring manager decides whether to proceed with or rescind the offer. He then advises the candidate of the decision. HR must keep notes from the reference checks for records purposes.


Reference checks must be fair and consistent for all candidates. HR should only check information that is related to the skills and qualifications for the position. This excludes any personal information that is not relevant or of which the reference provider has no first-hand knowledge. HR must also exercise caution with off-the-record remarks. At all times, HR staff must protect the confidentiality of the process and the candidate's privacy by only sharing information that is required to get the reference.


The candidate must provide consent to the reference checks before the company can proceed. HR usually asks the candidate to sign an authorisation form. Reference checks must comply with all federal and state legislation such as the Fair Credit Reporting Act. The Civil Rights Act prohibits the use of information from criminal reference checks as a basis for denying employment, unless it is job-related.


HR may find it difficult to get sufficient information about a candidate. Some employers will only confirm employment dates and positions, and hesitate to share negative feedback about a former employee for fear of being sued. In case of adverse information discovered during the reference check, HR must inform the candidate and provide him an opportunity to appeal or explain. However, the hiring manager still makes the final decision to proceed with hiring.

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