Employment Reference Checks: A Guide for Small Businesses

Employment reference checks are calls you make to at least two references (they may be personal or professional) where you ask about the candidate’s qualities, qualifications, and work habits. While most references provided by an applicant are biased in their favor, asking the right questions can help you uncover some red flags or confirm your hiring choice.

This guide covers the types of reference checks, how to conduct them, and legal issues surrounding reference checks, including questions to avoid.

Types of Reference Checks

There are two types of reference checks that HR or a hiring manager may perform during the hiring process: personal and professional. Each presents a different set of questions, and you’ll generally have a more extensive list of questions for the professional reference.

Personal Reference Checks
Professional Reference Checks

A personal reference check is when you contact a candidate’s personal references, such as a friend or family member. The reference check questions you ask can help you learn about the character of the candidate.

What is your personal relationship with the candidate?
Would you describe the candidate as having been successful in their job?
How does the candidate handle stress and conflict?

Download Sample Personal Reference Check Questions

A professional reference check is when you get in touch with a candidate’s professional references, such as a former employer, boss, or co-worker. The questions for this type dive deeper into the job history of the candidate.

What type of work did the candidate do for your company?
How were the candidate’s relationships with colleagues and supervisors?
Was the candidate successful in their role with your company?

Samples professional reference check questions.

Download Sample Professional Reference Check Questions

How to Conduct Employment Reference Checks

The employment reference check is one of the most important applicant screening steps in the hiring process. This might be the only time when you talk to someone other than a candidate about their skill set and work performance. To get the most out of these calls, follow the steps below.

Before conducting a reference check, always get permission from the candidate. It’s routine practice to ask every applicant for several references, and it’s best to ask for at least three supervisory references within the last three years. Speaking with colleagues can supplement other references, but you will want to know the manager’s perspective.

What about references not provided by the candidate?
Generally, it is best practice to simply use the references provided by the candidate. But in some circumstances—perhaps you know someone who worked with your candidate—you may wish to use a reference outside of the provided list. This is known as a backdoor reference, which can sometimes provide a broader, blunter, and more valuable perspective about a potential employee. Just keep in mind that a candidate may not have shared with others, particularly their current employer, that they are looking for a new position, and you could be putting them in an awkward position.

Having a standard list of questions to ask when checking references, such as the samples we included above, is important to avoid legal complications and ensure you’re getting the specific information you seek. Your goal in conducting an employee reference check is to verify the details that the applicant has given you.

Beyond that, you want to get a feel for the applicant’s work ethic and efficiency from a former supervisor. This can provide vital insight into how the employee will perform in your organization.

Once you receive a list of references and permission from the applicant, it’s time to make calls. If you can’t reach a reference, ask the candidate to call the reference and let them know you’re trying to reach them. You can also ask the applicant to give you another reference.

Ask open-ended questions. It’s the best way to get quality information and allows the reference to provide a detailed response beyond just a “yes” or “no.”
Listen to the reference’s answers. Ask follow-up questions and read between the lines. Hear what the reference is saying and, often more important, what they aren’t saying. Make sure you’re asking “How” and “Why” questions. If a reference says an employee was great, ask why.
Observe how willing a reference is to speak with you. References provided by applicants should be ready, willing, and able to speak openly and freely about the candidate. If they are reserved or vague or provide short answers, that’s telling.
Don’t be afraid of silence. Ask your question and let the reference respond. If they take a second to think about how to respond, don’t jump in, give them ideas, or try to lead them to an answer. Let them answer honestly and in their own words.
Discuss intangibles. This could be how the applicant interacts with supervisors and direct reports. It is helpful to ask about a skill the candidate could improve—and if the reference says they could improve their interpersonal skills and the job you’re hiring for is customer-facing, maybe you need to go back and ask more questions about their demeanor with clients.
Look for inconsistencies between references. If all references are saying similar positive things, you have a suitable applicant on your hands. But if one reference has trouble providing detailed insight or gives vague answers, it could be a sign the employee didn’t stand out or their work product wasn’t always adequate. Every reference won’t say the same thing, so some level of inconsistency will occur. Ultimately, however, you’re looking for trends, both good and bad.

Note: In place of references, applicants may offer you a reference letter. However, these often provide only surface-level information, don’t give you the chance to ask questions of the reference, and may have even been written by the candidate. Take the reference letter into consideration, but continue to conduct professional reference checks.

When to Conduct a Reference Check

Do not call any reference until later in the hiring process. Call former supervisory references when you’ve narrowed down the candidate pool to your final two or three. At that point, you’re confident that the applicants could do the job, and speaking with references may help put one candidate at the front of the pack.

It is recommended that you ask for references when scheduling the first interview. Some companies ask for references when the candidate first applies for a job. Doing so can make the reference check process go faster, but asking for references this early in the hiring process may scare some candidates away. They may not want to give reference names out of fear that their current employer will learn they’re looking for a new job.

Legal Issues When Conducting Reference Checks

Many companies do not allow their HR personnel or supervisors to respond to employee reference check questions, and they have this policy to keep them out of legal trouble. If a reference gives honest feedback but cannot objectively prove the truth of their statement, they could be liable for defamation if you choose not to hire the applicant.

That doesn’t mean you should give up, however. You should still verify the information provided by the applicant. Most companies will still give you objective data, such as

Dates of employment
Job title
Supervisor’s name

It is also recommended that you ask, “Is the employee eligible for rehire?” This can give you important information. A “Yes” tells you the employee left on good terms and did at least good enough work for the company that it would consider rehiring them, whereas a “No” indicates the employee may not have left on good terms or did not perform well at work, which raises red flags.

If a reference does not want to or is prohibited by company policy from answering questions about the employee, you should not take that as an absolute negative. You can ask the candidate for additional references who might provide more insight.

Types of Questions to Avoid

You should also consider the legality of the questions you plan to ask the references. In some jurisdictions, asking about an employee’s salary is illegal. If you are hiring someone in one of those jurisdictions, you cannot ask previous employers how much they paid the applicant. All questions must relate to the job, and the same discrimination laws that apply to interview questions apply to employment reference check questions.

You also cannot ask references any questions that you cannot ask applicants. These include questions about the candidate’s:

Age
Family life
Religious affiliation
Disability

The best way to avoid these questions is to have a standard policy for employee reference checks and your list of questions at the ready. Consistency ensures that you get the necessary information about applicants without putting your company in legal danger.

Bottom Line

Employee reference checks are a vital part of the hiring process. Speak with at least two references for each candidate and ask them all the same employee reference check questions so that you can evaluate applicants equally.

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About the Author

Jennifer Soper