The Best Practices In Employment Verification

The Best Practices In Employment Verification

Employment verification is an important part of the modern employment landscape. In this article, we’re going to provide you with a robust guide for your business so you can understand what employment verification is and get some insights as to how the employment verification process works.

Additionally, we’ll provide some insights as to how you can use background screening properly within the allowed regulations, and provide details on how you can optimize your verification process. We’re excited to show you the role that a thorough screening process can play in your business, no matter if you use it for HR purposes, income verification or KYC (Know Your Customer) functions.

The Basics of Employment Verification

Let’s review some of the basics of employment verification and background checks for companies, how they came to be, and the role they can play in the employment verification process.

What is Employment Verification?

Simply put, employment verification is a way for employers, institutions, and individuals to double-check and confirm employment information provided to them by an individual. There are varying degrees of employment verification, and some are more rigorous and formal than others.

If your company isn’t using a formal method for employment verification, you are very likely at risk. While it’s not something we like to think about or admit, we have to face the fact that many people aren’t 100% forthright on their resumes or other loan applications.

The things that people are dishonest about about can vary greatly. Some common things that we find are misrepresented are the length of time people were employed, the number and type of positions people have, their overall qualifications, and titles.

When you rely solely on the information you receive from the individual that you are processing a job application or loan for, you may not want to bet your company’s future on information that you have no way of truly verifying. This can be especially problematic if you’re trying to draw up a risk profile for loan verification or determining qualifications for a mortgage program. This is where a verification of employment solution comes in.

Employment verification is a specific type of background check that attempts to vet all of the information that an applicant provides prospective employers or lender. Rather than pulling these details at face value from a loan application, resume, personal website, or LinkedIn page, the information gathered during a properly conducted employment verification process can be fully trusted as accurate.

How Does Employment Verification Work?

So you’re considering using employment verification services for your business, but before you do, you want to be more clear on how it all works. Here are some of the details of how the process works (and why you probably shouldn’t try to handle this on your own).

Remember, there are two sides to this coin– there are applicants that you will be seeking employment verification for, but there are also companies, lenders, and individuals also seeking to verify one of your employee’s work history as well, especially in processes such as mortgage applications or business loans. Let’s look at both of these scenarios to see how employment verification can work.

Seeking Verification of Employment for Applicants

Firstly, it’s critical that you keep in mind that you can’t conduct any background checks in secret. When doing any sort of employment verification checks, the Fair Credit Reporting Act (FCRA) requires that person’s express permission, in writing. Therefore, you must be careful and use the correct written consent form, as there are certain criteria that are legally required.

Typically the employment verification can begin once the individual you’re checking up on signs off on their formal waiver.

From here, we highly recommend using a partner like Quentelle to handle the rest to save you hours of time and protect yourself.

From here, in many cases, the manual contact of each person on a person’s resume is necessary. Note that if you or your human resources department is handling this, it can be time-consuming and ongoing.

When attempting to verify employment, you’ll want to check for some key pieces of information. Remember that there are laws and regulations about what you’re permitted to ask. Some of the primary pieces of information you’re looking for are:

  • Did this person actually work where they said they did?
  • Did they hold the title and have the responsibilities they claimed to have?
  • Did they work at each company for the amount of time and the specific dates stated?
  • Are they eligible for rehire?

Note that in certain states, there are regulations about what you’re allowed to ask and what information can be shared. For instance, in some cases, asking about an employee’s previous salary and the reason why they are no longer employed are fine, and in other cases, it is not.

Replying to Verification of Employment for Current Employees

There are a variety of reasons why you might receive a request to verify a current or former employee’s current role at your company (we’ll go over these in detail later).

It’s often seen as good form for your company to let the employee in question know that you’ve received a formal request for their employment details. This is not only professional but also a good way to check the legitimacy of the request quickly.

No matter what, be 100% certain to verify the request before you give out any details regarding a past or present employee’s information.

Once you’ve verified the request and you’re sure it’s legitimate, you have to decide how you’re going to provide the verification. Sometimes the inquiring company will have a specific format they’re requesting (such as a standardized form), and other times the choice will be up to you.

A popular way to verify employment for someone is with a proof of employment letter. Usually printer on company letterhead (which proves your address and info), the letter typically includes important details about the employee such as their title, the dates they worked for you, and in some cases their duties. You should also include the best ways to contact you in the event they have further questions.

Outside of a letter, some other methods of proving employment are employee paystubs, and any agreements or contracts (typically for freelancers).

What About Defunct Companies?

If the company that you’re trying to contact for your pre-employment background screening is no longer in business, there are still ways to confirm these details. Paystubs, W-2 tax forms, and other documents will all prove that an employee worked for a company.

Employment Background Checks are Time Consuming

As you can see, whether you’re verifying the employment record of an applicant your company is considering bringing on board or helping a past or current employee verify their employment with your company, this is a time-consuming process.

More on this later, but we’d be remiss if we didn’t mention that you should consider using a company like Quentelle to save time, reduce administrative costs, and protect yourself.

So what is it that we need employment verification, and how did it come to formally exist?

Why Do We Need Employment Verification and Why Does it Exist?

The reason that employment verification exists is so that employers can have a proven and confirmed record of a person’s job history and other details. Why?

Well, it’s not only to make sure that the person they’re hiring has the qualifications they claim to have but also because, at the root, a company is responsible for the actions of its employees.

Let’s say that an employee of your company engages in criminal behavior. Did you know that your company could potentially be accused of negligent hiring? And did you know that if accused, your company can also be required to appear in court and potentially be held responsible for punitive damages?

That means that not only would you likely be paying for expensive legal fees, but you also may have to pay money as compensation for something one of your employees did.

Employment verification helps companies mitigate risks when hiring employees. Rather than taking someone’s word alone, employers can also use a clear and verified work record and background check to see if they have prior criminal activity (as well as other important details).

When your company uses background checks and verification of employment as part of its hiring process, you’re letting all of your current employees know that you care about your company’s culture and reputation.

So Where Did This All Start?

If you want to get technical, we can reach as far back as 1908 to see a case where an employer was held responsible for an employee’s actions, and it cost them dearly. In a machine shop in Corbin, Kentucky, an apprentice played a practical joke with a compressed air hose that killed a fellow employee.

This wasn’t an isolated incident, and management never stepped in. So even though the apprentice in question continued to act in a way that was careless, reckless, and unfit, he was still allowed to work in the machine shop.

Because the machine shop let the man continue reckless behaviors during his employment that resulted in a death, the machine shop was ultimately held responsible for the death themselves.

This case set a legal precedent, and throughout the years the matter of an employer’s accountability for employee actions has had several surges.

As recently as 2008, another crucial reason for employment background checks came into play– a massive economic downturn that resulted in a national financial crisis. Until 2010, lenders had no employment screening services in place. This meant that lenders weren’t required to verify or document employment for the people who were borrowing.

Unfortunately, this meant that loans were being granted based on people’s personal judgments and some predatory lenders in the financial industry.

With the creation of the Consumer Financial Protection Bureau came the passing of several regulations and laws that now required both the lender and the consumer to work together to prove that the borrower could actually afford the debt.

A specific example is the Ability-to-Repay rule, which states that a lender or creditor must make “a reasonable, good-faith determination of a consumer’s ability to repay” loans according to their terms.

By formally verifying someone’s employment, lenders can accurately determine if the person applying for the loan is creditworthy, and also lowers the risk of fraud.

Through the years, technology for performing background checks and employment verification has changed, but the core reasoning behind them has not. Whether you’re an employee or a lender, when you use employment verification and background checks, you’re protecting yourself, your employees, and your business as a whole.

Employment Verification and HR Platforms

Employment verification has many uses. Many companies, individuals, and organizations use these sorts of specific background checks. Requests could be from a company looking to hire a potential applicant, a landlord who is looking to rent out their property, or a financial institution looking to qualify a borrower.

Remember that employment verification isn’t only used for a company’s hiring process, it can also be used by other organizations for various– but important– reasons. No matter the reason, the accuracy and regulations of employment background checks are critical. Here are some of the use cases for employment verification.

Common Employment Uses

Hiring an Applicant: employment verification can be used to double-check the validity of what a potential employee put on their resume.

Verifying a Salary: In some cases, a company that is hiring an employee may want verification of the salary the applicant is currently making before formally offering them a specific amount.

Common Financial Uses

Verification Prior to Loan Approval: Nowadays, when you are formally applying for a loan, some sort of employment verification is required. This information is key so that lenders know that your income will allow you to make the payments necessary to keep your loan current and in good standing.

Verification for Rentals and Leasing: Apartment companies and property managers will typically use background checks to verify an applicant’s employment. In some cases, they’ll want to double-check monthly income to ensure the rent/lease payment is feasible.

How Automated HR Platforms Have Changed Things

For many years, companies only had a few limited choices when it to how they would handle their background checks. There was also not a lot of emphasis on privacy and security of information. That is no longer the case in the current place we’re in technologically.

Automated human resource platforms have taken much of the paper and pen work that HR departments were doing manually and moved it into the cloud. And if you choose the right platform (such as Quentelle), you’ll be able to handle many of your verification requests automatically. When this automation is in place, much of the heavy lifting of employment verification is removed from your HR staff. This will keep them from staying busy with the shallow, ongoing work that these employment background checks can be.

If you choose the right partner, with this verification automation also comes robust reporting so you’re never in the dark about any requests that are coming in.

Additionally, proven HR platforms are far more secure than traditional means. Not only will employer and employee information exclusively be shared over secure and encrypted channels, but through electronic signatures, the information will only be shared with the correct parties after documented employee approval has been logged.

Beware of FCRA Laws and Regulations

When it comes to background checks and employment verification and any financial applications, it’s critical to keep the Fair Credit Reporting Act (FCRA) in mind. So what is the FCRA, and what does it mean to show compliance?

The FCRA is in place so that all employers are required to conduct all of their background checks fairly. It seeks to ensure that all inquiries are not only fair and accurate for consumers, also but as transparent and thorough as possible.

If you’re not careful and don’t familiarize yourself with the specifics of the FCRA, your business could be in danger of a lawsuit.

So what constitutes an FCRA-compliant background check? The organization that handles this is the Federal Trade Commission (FTC), and they have a set of guidelines that are your responsibility to follow as a business.

Firstly, your employees have a right to know about the background check. They also need to provide explicit consent for the background check, and they also have the right to review any of the information that relates to their financial and personal information.

Additionally, if they feel there are things on their background check that are inaccurate, they have the right to attempt to correct them. Further, they also have the right to appeal any decisions if they feel they were treated unfairly based on the information that their background check reveals.

Before You Request a Background Check

Be sure you provide written notice to any applicants explaining that you plan to use info from their consumer report to possibly make hiring decisions. This has to be a standalone notice (not part of a job application). You’ll need direct written permission to access this person’s consumer information.

Before Making Decisions Based on a Background Check

If you decide not to hire someone because of what you learn in a background check, you have to take certain actions before you choose not to hire them, promote them, or take other negative actions regarding employment. First, you have to give the person in question a copy of the information you used to make your decision. You also have to provide a copy of a summary of the person’s rights under FCRA (obtained from the FTC). You also need to give them a reasonable amount of time to look over everything you sent and contact you if there’s any information you’d like to dispute. You can find more information about FRCA from the equal employment opportunity commission here.

After You Make Decisions Based on a Background Check

If you give the person in question time to respond and still decide that you aren’t going to hire them, give them a promotion, or perform other negative actions based on their background check, you have to let that person know. Typically this must be done in writing, electronically, or verbally. When you do this, you must use a specific form called an Adverse Action Notice. This allows them another chance to correct any inaccurate information.

These notices are nuanced and have specific details that need to be included when you send them. They must include the person’s right to refute their accuracy or correct any information that is wrong or incomplete. Additionally, a statement must be included that says that any background screen service used didn’t decide to take “adverse action” and cannot give specific reasons for this decision. Finally, you have to include the specifics on which consumer reporting agency you obtained the report from.

An Important Note About FCRA Compliance: Remember that the information included in this article is intended to be helpful and is not an exhaustive guide on the topic of the Fair Credit Reporting Act. This guide should not be construed as legal advice. We’d love to talk to you if you have any questions about how you can navigate the FCRA.

Equal Employment Opportunity Commission

Compliance is very important when it comes to the FCRA, but it doesn’t end there. You also need to consider the guidelines that are viewed by the Equal Employment Opportunity Commission (EEOC). These guidelines are in place to minimize discrimination.

For instance, you’re not allowed to check certain criteria of a person’s background when it comes to things such as age, race, nationality, the color of skin, gender, beliefs, or disability. In fact, in some cases, you may need to make concessions if it comes to light during a background check that certain problems are present due to a disability.

You’re also not permitted to make decisions based on any profiling of any kind, or to avoid challenges that you perceive to be more common in certain groups of people.

In the eyes of EEOC, you must be able to prove that you are applying the same standards to everyone as equally and fairly as possible.

Overall, the best way to protect yourself is to have the same criteria for screening every individual no matter who they are.

Employment Verification Best Practices For Employers, Government Agencies, and Financial Institutions

Put in the Effort: Unless you hire a company like Quentelle, handling your own employment verifications is often time-consuming and no small task. You’ll have some verifications that are easier than others, but there are also some (maybe most) that are going to take much more time and effort on your behalf. When you do hit one of the tougher verifications, be sure that you do all you can. We recommend four or five attempts, and each attempt is counted when you reach out to the correct contact using one of the following contact methods: phone, email, letter, or even fax. We also recommend alternating methods (first call, then email, etc.) to maximize your chances of getting a hold of someone on different mediums. It’s always the best idea to make notes each time you attempt to contact someone for verification so that you can also show when you tried and the method you used should that information come into question.

Decide Your Timeframe: Some resumes will go back a decade, two decades, or more depending on the age and work history of the applicant. Decide for yourself how far back you want your standard check to include. By choosing a standard amount of years– say 5– that you’ll verify, you’re approaching each employment verification with a level of fairness. The last thing you want when you’re background screening is to accidentally leave yourself open to what could be construed as discrimination by treating applicants differently. When you decide the amount of time you’re going to use during your own personal screening process, stick with it, and you’ll not only get better results overall, but you’ll show that you’re being fair to those that you’re screening.

Don’t Assume Current Employers Are Expecting Your Call: Candidates who are seeking to work for your company may not have told their current employer that they’re in the job market. This is why it’s so important to gain clear written or verbal consent from each applicant. You don’t want to jeopardize the employee’s opportunity to personally make their current employer aware that they are planning on leaving. In some cases, this can cause tension in the workplace for the applicant, and in some extreme scenarios cost them their employment sooner than they were planning.

Can’t Get Through? Do Some Research: If you’re having trouble reaching a specific company or contact in your pre-employment background screening, it’s easier than ever to do some digging yourself online. Perhaps the company you’re trying to reach has had some changes recently. Remember that phone numbers and extensions can change, people transfer or are promoted or move on, emails change, and companies even change their primary URLs. With all the different avenues available such as Google, LinkedIn, and corporate sites, it’s likely you can get the updated information easily if you take a moment to search.

Deeper Searches for Certain Sectors

For various industries and sectors, employment verification is more critical than others. For example, when it comes to banks, financial institutions, and government agencies, a keen eye for detail is needed. Go deeper to ensure that you’re secure, and the candidate you’re considering is the best fit.

For example, verifying dates and titles may not be enough. Consider asking about any prior issues with performance, or if there were any specific essential skills needed to perform their specific job. Also, you can directly ask about work ethic related to their previous position and what was needed to find success in the role.

What about gaps in employment? How many are there and how long were they? Also, don’t be shy– if information that an applicant has provided you isn’t lining up, don’t be afraid to explicitly ask about details. Don’t be afraid to ask questions and dig deeper. You may find that the applicant in question is showing unethical behavior by misrepresenting key details to give a certain impression that isn’t expressly accurate.

Your aim here is to be sure that you are confidently hiring the employee that you think you are and are fully informed.

Quentelle is the Gold Standard in Employment Verification

Not all methods of employment verification are created equally. We’re able to deliver a best-in-class screening process to companies of all sizes– from start-ups to Fortune 500 businesses. We’d love to show you why we’re the industry leader in a full range of any employment verifications you might need.

Not only will you save time and administrative costs by using our turnkey automated system to handle all of your employment and income verification, but you’ll also allow your human resources staff to focus on other facets of your business.

When it comes to employment screening services, we offer the state of the art in security and compliance. Our dedicated focus on data privacy and security is second-to-none, and we adhere to FCRA compliance, have SOC I & II certification. In addition, we not only use at-rest encryption and proactive threat screening but also use masked PII for the ultimate in data security and privacy.

Companies like yours choose our platform for their pre-employment background screening for many reasons, but one of the most common is because our software is as simple to use as it is powerful. We take the absolute very best in background check services and deliver it to you in one simple platform.

Additionally, if you have any questions about our platform at all we have a dedicated staff who is here to help. Everyone on our support team is highly-experienced and is expertly trained on our platform. No matter what your question may be, our unmatched support team will handle all inquiries quickly.

Let us show you why here at Quentelle, our motto is “smart and simple”. Schedule a demo today and let’s talk about how we can help your company with its pre-employment background screening needs.

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