While conducting reference checks on potential employees is a sensible way of managing your business risk, employers must carefully follow legal limits on the type and extent of background checks they can conduct.
First, when making inquiries into an applicant’s past, ask for the consent of the applicant and get approval in writing. Inform the applicant (in writing) whom you will contact and what questions you will ask.
Your state may have additional regulations, so it’s generally a good idea to check with your attorney to review your liabilities. For example, some states do not allow background checks into criminal records unless it’s required for a specific profession. In most states, employers are not entitled to research several types of records without written permission, including bankruptcy, credit history, medical records and worker’s compensation records, military service and educational history.
Local governments usually make driving records available, sometimes for a nominal fee. To minimize legal exposure, limit your background checks to issues that relate closely to the job for which you are hiring.
On the flip side, companies may be held legally accountable — and sued for negligent hiring — if they do not perform certain types of background checks. Examples include checking driving records for service or delivery personnel and checking criminal records for positions that involve handling of confidential data or financial information.