Understanding employment verification vs. reference check can be difficult as they’re often used interchangeably. Despite the common belief that they refer to the same thing, these processes are different.
Both employment verification and reference checks are necessary steps of the hiring process, vital when considering a candidate’s suitability for employment. However, reference checks cover a much broader range of sources over a greater number of topics. Therefore, it is necessary to understand the meaning behind both checks, how they differ and how employers can use both methods to help make smarter hiring decisions.
Employment Verification vs. Reference Check
Employment verification and reference checks are two completely different steps that usually take place at the same stage of the hiring process. Employment verifications verify information that was given during the application process and reference checks serve as a valuable opportunity to learn about candidates from the perspective of their previous manager or colleagues.
Employment verification is a critical part of hiring, lending, and background checks, mainly used to help employers determine who has the knowledge, skills, and experience to do the offered job. Being a part of a more comprehensive check, employment verification uncovers unexplained gaps in employment and undesirable behavior patterns in applicants’ work history. It can also reveal inaccuracies and validate the information that applicants provide to employers.
The main purpose of employment verifications is to confirm the various aspects of applicants’ work history, such as:
- Dates of employment;
- Job performance;
- Reasons for termination or separation;
- Knowledge, qualifications, and skills;
- Eligibility for rehiring;
- Salary amount, if allowed;
- Professional conduct,
- Any disciplinary actions.
Employment verification steps are not always the same but usually follow a similar pattern. While the process itself can vary, its goal is to ensure that applicants have the experience and previous job responsibilities needed to qualify for the position. In addition to this, employment verification can reveal other useful information, such as false employment claims, gaps in employment, or fabrication of job titles.
Reference checks are a broader tool compared to employment verification, based on different methods of collecting information from multiple sources which cover many aspects of prospective applicants’ life. As such, reference checks serve as a valuable opportunity to learn about applicants from the perspective of their previous manager or colleagues.
The most frequently used sources for reference checks are coworkers, direct managers, or other employees who worked closely with the candidate while areas of interest usually include demonstrated work ethic, personality traits, cultural fit, past behaviors as predictors of future behavior, and punctuality.
This type of verification also seeks to capture insights about applicants’ reliability, communication, ability to collaborate and how they work as part of a team among other aspects depending on the role. As a result, employers can gain a deeper understanding of who an applicant really is and how they actually applied the skills in their previous role, but also if they would be a good fit for their organization and manage the tasks that will be required of them.
A third term that is mistakenly equivocated with employment verification and reference checks is a background check. This process is used to investigate a wide range of information based on the parameters of the hiring company, such as criminal records, previous employers, education, motor vehicle and license records, and more.
Use this comprehensive guide to enhance your employment verification process and ensure making smarter hiring decisions for your company.
Employment Verification and Reference Check Best Practices
When conducting employment verification and reference checks, it is important for employers to have policies and procedures in place to handle these requests:
Deciding When to Conduct Reference Checks
Employers usually wait until they extend a conditional offer of employment to conduct reference checks. However, if they perform reference checks earlier in the hiring process, it is essential to be consistent about the timing and confirm that they can lawfully obtain the requested information before extending an offer.
Before checking an applicant’s reference, providing a reference for a former employee, or verifying the employment of a current employee, employers need to obtain and retain written authorization from the individual. If employees need employment verification, they should submit a written request that includes an authorization to release the information.
Requesting and Providing Information
In the process of conducting employment verification and reference checks, most employers are willing to disclose information on dates of employment, positions held or final salary, but can be less inclined to provide information on issues related to performance or conduct. It is considered a best practice to provide only limited information about former employees, but if employers choose to provide more information, it has to be accurate and job-related. Also, they have to be careful to provide the same types of information about all former employees.
Direct Reference Checks
Even if applicants provide a letter from the reference, it is a best practice to contact a reference directly via phone, ideally, someone who has directly supervised the employee. Also, to help ensure consistency, employers should designate a single individual to handle all reference requests in accordance with company policies and federal, state and local laws.
Using the Right Tool
Although employment verification and reference checks are often used interchangeably, each describes a distinct process but aims to produce accurate information about applicants’ employment history and job performance. Employment verification confirms and details the essential facts about applicants’ previous jobs, while a reference check builds upon that information and gives employers critical insight into different aspects of potential employees’ performance.
Employment verification and background checks can give employers a wealth of crucial information about applicants and help them make the best hiring decisions. To enhance this process, they can use an employment verification service and conduct verifications in a fast, effective and accurate way while meeting all data privacy requirements and ensuring complete transparency of the process.