Your human resources (HR) department will field requests from former - and sometimes current - employees for references. The issue of providing references to current or previous employees can be a thorny one, as some employees have been known to take legal action against employers whose references have not provided a positive impression.

As a result, some companies have policies against providing references, although state laws may require employers to provide a document that verifies a former worker's employment history.

What Are Job References?

A job reference is a verbal or written statement by an employer that describes an employee's work performance. Because many companies request references from job applicants, it's not unusual for HR departments to receive multiple requests for references from current employees who are seeking new work, as well as those who have already left the company.

In some cases, the questions from a hiring manager or recruiter are perfunctory; the hiring manager or recruiter simply wants to know about the employee’s job title, job description, salary and length of employment. In others, the person asking for a reference may want more in-depth information about the applicant, including details about work style, relationships with coworkers, personality and even hard data about on-the-job achievements.

Other Types of References

Some employers are asked to provide references for current employees who are not seeking new employment.

For example, an employee who is applying for a mortgage may need a letter from their employer that verifies their salary and length of time on the job. Another reference request may come from a local not-for-profit organization that is performing a background check on a new volunteer.

Job Reference Considerations

While providing a job reference may seem straightforward, many businesses have a policy against doing so. This is because some former employees have filed defamation lawsuits against former employers because the employees felt that their references were untrue and negatively impacted their professional reputation and chances of obtaining a new job.

Because of this concern - and the very real possibility of poorly worded references being misconstrued - many companies have established a policy of not providing job references for current or previous employees.

Instead, these companies instruct human resources and other staff to simply verify an employee's employment title and dates when someone asks for a reference.

Employment Verification Laws

There are no laws that require employers to provide references for current or previous employees. It is also legal for employers to provide negative references providing that the statements are accurate.

The fact that it is legal to provide a negative reference, however, does not mean that it is always a good idea to do so. If a hiring manager or recruiter passes along the negative statements to the job applicant, the applicant may become angry and take legal action against that company.

Since many HR departments have a policy of only offering employment verification rather than a full reference, recruiters and managers will often ask the HR department whether the employee is eligible for rehire.

This allows the HR department to offer a “yes” or “no” answer without providing details that could later be challenged by an attorney.

Employee Permission

In some states, an employer can only provide a reference if the employee has given the employer permission to do so. While this may seem a bit odd - typically, you aren't going to receive requests from a recruiter unless the employee is actively looking for a job - these laws are in place to protect workers' privacy.

Service Letters

Some states require employers to provide service letters to former employees. These are letters that provide the facts of an employee's work history without offering a lot of personal detail or recommendations regarding whether the employee might be a good job candidate.

States that do require these letters often place restrictions on the type of information that they can contain.

For example, some may only allow verification of employment dates, job title and duties, while others may allow more detail, such as salary information.

Sample Employment Verification Letter

Below is a sample of a simple, standard employment verification letter:

To Whom it May Concern:

Jess Sterling was employed by General Contractor Associates from May of 2016 through September of 2019. Her original job title was that of sales associate, and she left the company as an account executive. Her base salary as of September 2019 was $65,000 per year.

Chris Phelps

Human Resources Director

If an employee requires a verification letter because she is applying for a mortgage, find out if the lender already provides a form for this purpose. If not, ask the employee if the lender has guidelines for the information that must be included in the letter.

For example, some lenders only require verification of the employee's net income, as opposed to gross income. Because applying for a mortgage can be a stressful time, ask to see the actual guidelines to avoid having to redo the letter because the worker left out important information.

Here's an example of a verification letter provided to an employee who is applying for a mortgage:

To Whom It May Concern:

Re: Tracy Wiegland

This letter serves as confirmation of Tracy Wiegland’s employment with Loran Consulting:

  • Her salary is $95,000 annually
  • His net salary is $70,335 annually
  • Ms. Wiegland is employed with us on a permanent, full-time basis
  • She began working for us on March 15th, 2011.
  • She is employed in good standing with our company and is not on any type of probation.

Please feel free to contact us at 000-000-0000 if you have any questions.

Jan Timmins

Human Resources Director

Other Reference Letter Considerations

Because of the legal risks involvedt alking with an attorney who is familiar with employment law in your respective state is critical to developing a good policy.

Here are some policies and procedures that have been established by other companies:

Restrict Reference and Verification Duties

Only permit HR staff to provide verifications and references. Requests to other employees must be referred to the HR department.

This is a precaution that helps prevent a staff member from providing inappropriate information in a reference or verification.

Develop a Rehire Policy

Because many recruiters and hiring managers ask whether an employee is eligible for rehire, it is important that businesses have a firm understanding of what this means.

For example, you may have a general practice of not rehiring employees, which would mean that nobody, no matter how good their work might be, is eligible for rehire within your organization.

Since the question about rehiring someone isn't about internal policy, but about the quality of the worker, it's important to issue a clear statement to anyone who is asking this kind of question. To do otherwise could unfairly jeopardize a good worker's career prospects.

Work with your HR staff and your attorney to develop an answer to this question that reflects your company's culture while also giving a recruiter the information she needs.

Inform Employees

Let current employees know your employment verification policy, particularly regarding references and verification. This can prevent hard feelings in the future.