Reference Checks: What Employers Need To Know (Without Getting Burned)

Hiring someone new?

Reference checks can be a great way to get a clearer picture of your candidate. How they performed, how they worked with others, and whether they’re as good as they seem on paper.

But here’s the thing: sometimes, checking references isn’t just a quick phone call. There are privacy rules and legal landmines to be aware of, especially under Canada’s privacy law - PIPEDA (the Personal Information Protection and Electronic Documents Act).

And on the US side, there’s the Privacy Act of 1974 as well as state-level and/or industry-specific privacy laws to adhere to.

Why does it matter?

If you're not following the rules, you could run into:

• Privacy complaints

• Defamation claims

• Human rights issues

• Or all of the above.

Most provinces don’t have their own privacy law for private businesses (yet), so we must follow PIPEDA. It covers any personal info you collect, use, or share - like job history, performance, and even someone’s opinion about a candidate.

Basically, you need the candidate’s knowledge and consent to check references.

So, what does this mean in practice?

If you’re hiring:

• Only contact people the candidate has listed or approved.

• Let them know you’re doing it.

• Ideally, get it in writing and be clear about what you’re asking.

If you’re giving a reference:

• Make sure the former employee gave consent to share details.

• Be cautious - saying too much (especially negative stuff) without proof of consent can land you in hot water.

Here’s where employers often get tripped up:

• Privacy breaches: Sharing info without permission.

• Defamation: Saying something untrue or damaging.

• Negligent misstatement: Giving inaccurate info or an opinion that leads to a bad hire.

• Human rights violations: Making comments tied to race, age, gender, disability, religion, etc. (even unintentionally).

Example: Saying someone had “too many sick days” could imply a disability issue. Or describing a “young, energetic team” could come off as ageist.

Keep it job-related. Your questions should stick to the basics:

• Job responsibilities

• Work habits

• Performance

• Strengths and development areas

Avoid anything that touches on personal characteristics under Protected Grounds (age, marital status, sexual orientation, religion, race, etc.).

Should You Document Reference Checks?

Yes. Absolutely.

Keep a record of:

• Who you spoke to

• What was asked and answered

• Any concerns raised

• How it impacted your decision

This helps protect you if your hiring decision is challenged, and it ensures consistency and fairness.

What if you don’t want to give a reference?

That’s totally fine but just be consistent. Don’t offer references for some and not others unless there’s a clear, non-discriminatory reason.

Bottom line: Reference checks are a useful hiring tool, but they’re not risk-free. Get consent, stay job-focused, and document your process. A little caution upfront can save you a big headache later.

Want help setting up a reference check policy or templates for your team?

Let’s chat! I can help you stay compliant AND practical.