Employment verification laws explained

With the rise of professional networking sites such as LinkedIn, it may seem like a person’s employment information is common knowledge, but there are many details about an employee’s work history that are, by law, protected from disclosure. Employment-verification laws govern every aspect of an employee’s tenure with a company, from the hiring phase through termination and beyond. Here, we’ll look at the laws governing employment verification—both those ensuring that an employee is eligible for work and those relating to the details of someone’s current or past employment.

Employment-Verification Laws: The Basics

Employment-verification requests arise during a number of scenarios, from lenders seeking verification of income information to new employers confirming a potential recruit’s past work history. Employers aren’t obligated to respond to calls to verify an individual’s employment for a third party unless the requests are made by federal entities. However, since many important decisions, such as those having to do with loan origination or lease applications, hinge on completed employment-verification requests, its best practice for employers to respond as expeditiously as possible.

Employers who fail to respond to federal employment-verification requests can suffer fines and denial of government contracts for up to one year. Failure to complete an employment-verification request from another third party can dilute trust with current and former employees alike. The information typically requested from both sources isn’t hard to come by.

Employment verification typically requires basic information, such as job title, responsibilities, and dates of employment, but every state has its own laws regarding what information employers can disclose about current or former employees. For an exhaustive list of major state regulations governing discrimination by employers, visit here. Later, we’ll consider the most sensitive types of information and how employers can avoid claims of improper disclosure.

In 2017 alone, victims of workplace discrimination were awarded over $480 million as a result of rulings by the Equal Employment Opportunity Commission (EEOC). All employers should verify the information they can share legally according to their state.

Verifying Employment During the Hiring Process

In the United States, there are two major concerns for employers who are recruiting a potential new employee:

1. Verifying that individual’s work history
2. Ensuring that they’re able to work

Securing a professional reference is the most common method for verifying that an employee's stated work history is accurate and complete. Though such references can be requested directly by the hiring employer, several services automate reference outreach, and the hiring process more generally, including Checkr, BambooHR, and .

Federal law prohibits discrimination during the hiring process, so employers must ensure that they’re not providing negative or false information about an individual’s race, color, religion, sex, gender identity, national origin, age, disability, or genetic profile.

When to share Salary and Earnings Information

Several situations require verification of an employee’s current or past earnings, though state regulations vary regarding salary disclosure. A basic employment-verification request typically doesn’t include salary information.

In fact, certain cities and states, such as New York City and California, prohibit employers from seeking salary information during the hiring process. These laws are designed to prevent employers from basing their hiring decisions on a recruit’s financial situation or artificially limiting a salary offer based on an individual’s past earnings. If a third party requests salary information about an employee, employers should confer with that employee to ensure that the earnings information is necessary for the completion of the request.

When legal, many states have separate forms and procedures for employers to verify an employee’s earnings. In Texas, for example, Form H1028 enables employers to provide documented proof of an employee’s salary, benefits, and other earnings.

When to share Health and Disability Information

Employees’ health information is also protected from improper disclosure. For example, employers cannot require employees to take a medical examination before making a hiring decision. Employers can, however, ensure that someone is able to handle the core responsibilities of their role, such as carrying heavy items or reaching tall objects.

The Americans with Disabilities Act of 1990 prohibits discrimination based on a disability for qualified individuals. Disabilities under consideration include any physical or mental impairment that affects major life activities. Employees may request “reasonable accommodations” for their disability, and they’re free to do so as long as the accommodation doesn’t impinge on their ability to perform. If an employee requires such an accommodation, they should inform an employer during the hiring process.

HIPAA—the Health Insurance Portability and Accountability Act of 1996—exists to maintain the privacy of individuals’ protected health information [PHI], though it leaves employers free to disclose records of employment, including performance. Under HIPAA, employers cannot share information about an employee’s health history, disability-related or otherwise.

Completing Employment Eligibility Form I-9

Once a job offer is made, employers must ensure that their new hire is eligible to start work. All new hires in the United States must provide proof of their authorization to work in the country by filling out a copy of Form I-9 within three days of their start date.

Form I-9 asks for basic details, such as a new hire’s Social Security number, but the most crucial part of the form is the employer’s attestation that they’ve reviewed documents proving an employee’s eligibility to work.

Different documents carry bear different weight when proving employment eligibility. A U.S. passport, for example, suffices on its own to prove an employee’s work authorization, while a U.S. driver’s license or birth certificate requires additional supporting documentation.

Employers must retain a copy of each Form I-9 for three years. Penalties for failure to comply with I-9 regulations range from up to $5,500 per unverified employee to imprisonment for false statements.

Suing for Discrimination

Employees who think they’ve been discriminated against during the hiring or reference process can file defamation suits. The criteria for a successful defamation suit include the following:

• An employer knowingly made a false statement about the employee.
• The employer shared the statement with a third party.
• The employee in question was harmed by the disclosure.

Time is of the essence: Employees who want to file a suit under the ADA, for example, must submit a complaint within 180 days of termination. Employees who want to make a claim for wrongful termination with the EEOC must do so within one year of termination.

Employees should keep records of all communications regarding the alleged discrimination or defamation. When possible, they should also consult a local attorney about their options.

Know the law(s) to protect yourself and your employees

Employment verification may seem like a straightforward process, but employers and employees alike should familiarize themselves with the laws related to employee information disclosure to protect themselves from legal repercussions. In general, most information about an employee is safe for disclosure, except for salary and health information. In certain states, smaller employers are immune from punishments surrounding employment-verification requests, but all companies should carefully consider local rules and regulations to avoid costly mistakes that harm their bottom line and, more importantly, their team.