Understanding employment verification in California

Providing information about a former employee can be risky for a business. Potential consequences may range from lawsuits by angry ex-employees to penalties levied for unknowingly violating employment-related laws. Understanding employment verification laws in a specific state — in this case, California — can help you navigate these hazards with minimal risk.

How verification of employment commonly works

Basic employment verification corroborates someone’s claim they were once employed at a certain company. Often, the verifier, generally a human resources rep from the company at which an employee seeks employment, will ask for additional details. Employment verification queries may include the following:

• The employee’s start and end dates
• Job title or position with the company
• Reason for leaving the company
• Income verification for the employee, including salary information (Prohibited in California)
• Job performance
• Any skills and types of experience, such as certifications or experience working with specific technologies

Many states have differing rules on employment verification. In this piece we're looking specifically at California.

With more employers hiring remotely, businesses will need to be conversant with the laws for many different states — especially highly populated states like California.

Employment verification in California

Employment verification laws at the state level generally fall into two categories, the same two categories that apply to California. The categories are as follows:

• Laws that protect the employer when sharing information that might impact the former employee negatively
• Laws that limit or prohibit sharing certain details of employment history

Essentially, these laws boil down to limiting what can and can’t be shared with other employers or employees. This makes understanding these laws essential for any HR rep, because they’re the ones generally handling employee information.

Employer protection in California

Section 47(c) of California’s civil code classes “communication concerning the job performance or qualifications of an applicant for employment, based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, one whom the employer reasonably believes is a prospective employer of the applicant” as privileged communication.

That means former employees can’t sue the employer based on such communications — California specifically shields any privileged communication from defamation claims. Therefore, employers can feel safe about sharing details of an employee’s working history, even when those details may cost the former employee a job offer or cause them other problems.

Note that this law does not protect employers against making malicious statements about a former employee, nor does it protect a former employer who reaches out to a prospective employer rather than waiting for that prospective employer to make contact. Finally, if the employee had a severance agreement that includes a nondisparagement clause, the former employer may be limited in what they can say about the employee.

The other circumstance under which the liability shield may fail is if an employer gives an incomplete reference for a former employee. This can apply whether the former employer leaves out good or bad details of the employee’s performance. In one case, a school district gave a reference for a former employee who left out the fact that he’d been accused of sexual misconduct. The former employer was later sued based on this partial disclosure.

Because of the relatively generous legal protection the state provides, businesses conducting employment verification in California should be able to convince employers to share even quite sensitive details, such as why the employee left the company. In states with fewer protections, you may need to limit your employment verification questions to the basics.

Employer limitation in California

In January 2018, California enacted a law barring employers from checking salary history information for prospective employees. In fact, section 432.3 of the California labor code specifically states that “An employer shall not rely on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.”

This is critical information for any employer hiring in California because it extends beyond employment verification. Just asking a prospective employee for a salary history as part of the interview could put you in violation of state law. If a prospective employee volunteers their past salary information, it’s permitted in California for the employer to verify this information. However, a few cities and counties in California, including San Francisco, prohibit former employers from discussing salary history unless they have written authorization from that employee.

On the other hand, Section 47(c) allows employers to share anything related to “job performance or qualifications” of the former employee, which is quite broad. In essence, any question that touches directly on the employee’s work history is fair game. An employer can also answer questions like “Would you rehire the employee?” and reveal why the employee left the company.

Preparing for employment verification in California

With more companies hiring remote employees, it’s critical to understand how state laws may affect employment verification. Taking the time to review the laws related to employment verification in California and other populous states can keep employers from getting into trouble out of simple ignorance.