Business valuation is such a small world. So, when you’re considering hiring Vince Valuation, who…
Interviewee: James Crumlin
Bone, McAllester, Norton
Business valuation is such a small world. If the candidate that you’re considering used to work for someone you know, it’s tempting to consider that person a reference you can casually call for the “inside scoop.” And, why not?
For the answer to that question, we sat down with James Crumlin, Partner in the Nashville law firm of Bone, McAllester, Norton. James specializes in the area of employment law.
Borrowman: Getting reliable reference information about a candidate can be a tricky proposition. If you happen to be friends with one of your candidate’s former employers, wouldn’t it make sense to just pick up the phone and make that call?
Crumlin: I recommend not doing that. Reference checks are considered to be a form of a “Background Check”, which is governed by the Fair Credit Reporting Act (FCRA). When employers think of a background check, they usually think about something like checking for a criminal record or checking credit. They understand that a candidate’s permission is required for those actions. Reference checks should be treated the same way.
Borrowman: But, when a candidate’s resume includes the names of former employers, shouldn’t the candidate have an expectation that the potential employer is going to call them?
Crumlin: No. In fact, the opposite is true. If the candidate does not offer references and the potential employer does not request them, the candidate is entitled to the expectation that references are not being contacted.
Borrowman: What happens if you pick up the phone and call, anyway? How might that play out?
Crumlin: Maybe a previous employer could bad-mouth the candidate. Maybe the person was a good employee, but left for a better offer. Maybe the former employer just wants to get back at the individual for leaving. If you get information that negatively impacts your decision to hire, you can run into a problem.
Borrowman: Is there other risk?
Crumlin: One of the worst things that could happen is that the person you decide to call ends up saying something to someone else so that your candidate’s current employer hears of the situation and fires your candidate. That can bring a lawsuit.
Borrowman: So, the best course for a potential employer is to specifically ask for the references?
Crumlin: Yes. Submitting those references includes implicit permission to contact them. Some employers go even further by asking the candidate to complete an application which includes wording that gives explicit permission to contact references.
Borrowman: What if your candidate doesn’t offer a reference from a particular former employer?
Crumlin: You can certainly ask for a reference from that employer. If your candidate declines, you can ask why. Sometimes, this can be as revealing as the reference call itself.