Jeff’s On Call!: Background/Reference Checks

This week’s inquiry comes from Christine Hoffman-Hicks:

Hi Jeff,

I am a regular subscriber and reader of your insightful and informative column.  My question pertains to background checks for permanent (direct hire) placements: If our client is performing a background check on our candidate, should we still run of our own as well or is our firm protected from liability if something were to happen with this candidate down the road?  Our practice has been to always perform a background check if our client does not, but if they do we’ve deemed that acceptable. I can’t help but wonder if something were to happen, could we be held liable?

Thank you!


Hi Christine,

I’m so glad you’re benefiting from our assistance. That’s our goal!

Since you’re a loyal Fordyce fan, I have a gift for you – and all the other fans out there — that may well save your business.

But first, let’s answer your question:

Yes – I highly recommend reference checking when you’re actively working a candidate. That’s why I wrote the only book of its kind, The Perfect Job Reference. That’s also why it was a bestseller and remains one of the most requested library references on the shelves.

The failure to check references before a sendout – or not do it thoroughly enough – results in some very nasty disputes. Legally they include placement malpractice (negligence), breach of fiduciary duty (failure to protect the “client”), fraud (intentional misrepresentation) and even conspiracy to defraud (with the candidate) alleged by damaged “clients.” Please don’t rely on their reference checking. You can be sure they won’t when they come after you – big time.

Your E&O (errors and omissions) insurance may cover “errors” and “omissions”, but there’s no money in those allegations. The money is in the allegations of intentional wrongdoing. “Terrors” and “commissions” aren’t covered.

So count on that being the focus of any threat or actual lawsuit. Also count on punitive (to punish) and exemplary (to set an example) damages (in an unlimited amount in the discretion of the judge or jury) being alleged.

Then count on any E&O carrier writing you a “reservation of rights” letter telling you to forget about any coverage for intentional acts. What’s intentional? Deciding to send someone out without checking his representations? Of course! “Deciding” is intentional!

Fortunately, a majority of states have recognized a privilege to protect those who obtain information about a prospective employee on behalf of a client. This was acknowledged in a typical case involving a nurse’s registry. Judge v. Rockford Memorial Hospital, 17 IllApp2d 161, 217 P2d 687)

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But you absolutely must have the consent of the candidate in writing before checking any references! Not just any consent. It must be carefully drafted, current, and air-tight. Otherwise, you will run into invasion of privacy allegations (punitive and exemplary damages stuff) if you pass any of the information along to a client.

So as my gift to you and the rest of the Fordyce fans looking to protect themselves, I’m going to send you our candidate Reference Check Authorization and Release. Keep in mind that the statutes, cases, and administrative rulings at the federal level and in each of the states change. Ergo always check with your lawyer (Ahem!) for updates.

It’s too long to include in a JOC column, so to open the gift:

  1. Go to;
  2. Click the red JEFF’S ON CALL! button; and
  3. Type Candidate Reference Check Authorization and Release in the Subject field.
  4. Click Send.

I’ll reply with the Authorization and Release.


Thanks for subscribing, fanning, and asking,


If you have a legal question you’d like to have Jeff answer here on The Fordyce Letter, check out Jeff’s On Call! and submit your question.

More than thirty-five years ago, Jeffrey G. Allen, J.D., C.P.C. turned a decade of recruiting and human resources management into the legal specialty of placement law. Since 1975, Jeff has collected more placement fees, litigated more trade secrets cases, and assisted more placement practitioners than anyone else. From individuals to multinational corporations in every phase of staffing, his name is synonymous with competent legal representation. Jeff holds four certifications in placement and is the author of 24 popular books in the career field, including bestsellers How to Turn an Interview into a Job, The Complete Q&A Job Interview Book and the revolutionary Instant Interviews. As the world?s leading placement lawyer, Jeff?s experience includes: Thirty-five years of law practice specializing in representation of staffing businesses and practitioners; Author of ?The Allen Law?--the only placement information trade secrets law in the United States; Expert witness on employment and placement matters; Recruiter and staffing service office manager; Human resources manager for major employers; Certified Personnel Consultant, Certified Placement Counselor, Certified Employment Specialist and Certified Search Specialist designations; Cofounder of the national Certified Search Specialist program; Special Advisor to the American Employment Association; General Counsel to the California Association of Personnel Consultants (honorary lifetime membership conferred); Founder and Director of the National Placement Law Center; Recipient of the Staffing Industry Lifetime Achievement Award; Advisor to national, regional and state trade associations on legal, ethics and legislative matters; Author of The Placement Strategy Handbook, Placement Management, The National Placement Law Center Fee Collection Guide and The Best of Jeff Allen, published by Search Research Institute exclusively for the staffing industry; and Producer of the EMPLAW Audio Series on employment law matters. Email him at


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