After you have completed a reference check on an employee - how much information are you allowed to share? What do you do if the reference is the reason the employee is not hired?

You need to check the specific law in your state. Information obtained during a background investigation must be kept confidential and should only be distributed to the appropriate human resources manager or the hiring manager. Keep all records under lock and key at all times. There are severe penalties in many states for disseminating the information improperly. 

Many states require you to let the applicant know when they were not hired because of information in the background check. Also states have specific laws on what kind of information in a background check can warrant an employer not hiring the employee.

"background checks" such as criminal records, arrest records, and credit reports that are obtained through other agencies are generally covered by the Fair Credit Reporting Act, which has certain requirements in terms of obtaining permission and notifying them if you use any information obtained as a component of a decision disfavoring the individual.

"reference checks" such as calling people listed as references on an application is a different matter.  Liabilities and proscribed behaviors vary widely across states.  There are a lot of people/companies who do not do reference checks any more.  On one hand, you have the problem that pretty much everyone can find 3 people to say nice things about them.  On the other hand, it's not just employees that sometimes have an axe to grind against employers but also former employers against former employees so you may have to sit and wonder about who's telling the truth: did the reference check help?  Of course, there are more clear cut cases in "reference checks" such as when a prospective employee says they left their last job because they were bored and the former employer says the candidate was involuntarily terminated for insubordination and poor performance.

So, are we talking about "background checks" or "reference checks" and is there any other detail you'd like to flesh out a little more such as the state you are in or the actual circumstances?

thanks. I am speaking about reference checks and NOT background checks.

6341995:

thanks. I am speaking about reference checks and NOT background checks.

 

Without violating confidentiality, can you say anything more about the relationship between the person giving the reference and the candidate and the contents of the reference, or do you have enough to go on for now?

The candidate gave us a former manager. The manager ddin't speak badly of the candidate, but not glowingly either. At the end of the conversation it was determined that there were more warning signs. How can that be communicated back to the candidate?

6341995:

The candidate gave us a former manager. The manager ddin't speak badly of the candidate, but not glowingly either. At the end of the conversation it was determined that there were more warning signs. How can that be communicated back to the candidate?

This is one of those times where you have to ask yourself whether or not the reference is helping you understand anything.  Most business managers don't know much about references other than that you can get sued for giving one.  If the manager is being guarded and doesn't really say anything, that MAY be because he speaks the language and understands that a nothing special reference is the same as a bad one, or it may be because he doesn't feel free to speak, even about positive stuff.  If you've thought about that kind of thing and your gut says this guy was giving out the "stay away" signals regarding your candidate then you have to go with that.  Just understand it's not the same as a negative reference or actual evidence of fitness for duty.

If you plan not to hire this person because of a single reference, despite the fact that the reference never said anything bad about your candidate, then you are kind of in a pickle.  The real reason is that you have a hunch.  Now, you've said that there were more warning signs.  Those could be much more dispositive than your hunch based on a mildly positive or neutral reference.  All you have right now is that "the outcome of your reference check did not meet expectations."  This may get you into the middle of a slander case, of course, because the next question the person will have is "what didn't add up for you?"  You, of course, will not want to point fingers, and if there's enough money on the table, or the candidate is bored and wealthy, they'll force it out of you through the subpoena process.  The short version of this story is that I really like to minimize the impact of references on hiring decisions when I use them at all.

Alternatively, you can dodge the issue and say something like, "we've decided to continue our search.  While it's true that you aren't a bad fit, we're really looking for someone who has more <insert candidate's weakness here>".  I'm really interested in the totality of "warning signs" you have because you'd really rather give reasons other than "because someone didn't speak well enough about you behind your back."  In the end, you plan to continue searching.  Have you made a job offer yet?

Yes, it's difficult to tell from this if the manager stuck mostly to confirming the candidate's information (name, rank and serial number) without delving into details or if the person's performance was actually described to you without tipping of the hand either way in terms of the quality of the candidate and his/her work. But the fact that you refer to "more warning signs" indicates that something substantive must have been said--unless you are saying that the manager's evasiveness was in itself a warning sign.

I share the same interest as TXHRguy in hoping you could provide more specifics as to the warning signs.

At any rate, I would also agree that the last thing you want to do is point the candidate towards this manager as the reason you chose not to hire him/her. So, I don't think you want to relay this conversation back to the candidate at all. Better to be evasive yourself than possibly make this former employer the target of a lawsuit.

Not to mention the fact that the manager will deny having said anything like that unless it's heavily documented in the candidates former-employee-file.  If that happens, then it comes back on you possibly as some sort of illegal discrimination depending on what the jury believes, regardless of what actually happened.

 

Continuing down the same line, unless you use reference checking on every hire (or every class of hire that would include this particular opportunity) in some standardized way and have some sort of neutral guidance on how to "score" a reference, then if the former manager says something nice or not, it could come back as pretext for illegal discrimination because you do not apply your hiring standards evenly or simply because you, personally are biased and have interpreted the reference incorrectly to suit your diabolical plans to keep people of type X out of the organization.

That depends on whether or not you had told the employee that they would be hired if their references checked out okay.  If you have made a potential job offer, then it is harder to deal with.

If you have not made a potential job offer, you tell them that you appreciate their time but have decided to a) continue looking; b) have hired someone who you feel would be a better fit; etc. If there is no potential job offer, you don't have to tell them why the employee is not hired.

LadyAnn:

That depends on whether or not you had told the employee that they would be hired if their references checked out okay.  If you have made a potential job offer, then it is harder to deal with.

If you have not made a potential job offer, you tell them that you appreciate their time but have decided to a) continue looking; b) have hired someone who you feel would be a better fit; etc. If there is no potential job offer, you don't have to tell them why the employee is not hired.

As usual, Lady Ann raises a good point and I agree with her: if there is no offer or anything that could be perceived as an offer or contingent offer, then there's nothing to explain.  If they ask you why not, you say the usual stuff about a large pool of great candidates and it was a tough decision, etc.

We only provide with written authorization from the employee/ex-employee.  We do not give information over the phone.  It's always in writting and only with authorization.