Reference and background checkswhen hiring employees

March 1, 2008
You hire a new employee. Two months later you discover that insurance forms are not being completed and processed.

by Bent Ericksen and Tim Twigg

You hire a new employee. Two months later you discover that insurance forms are not being completed and processed. Your practice is experiencing a loss of timely revenue and patients are complaining.

The above describes one of the all-too-common consequences employers face when failing to conduct reference or background checks during the recruiting process.

Maybe on another occasion a new hire’s behavior suggests substance abuse, or you discover after hiring a new hygienist that he or she does not have a current valid license.

According to the National Association of Professional Background Screeners, 56 percent of applicant-supplied information contains one or more significant discrepancies. Another study found that more than 36 percent of employment verifications uncovered inconsistencies from what had been stated on the application, and 14 percent listed false or inconsistent information regarding education.

The risk and rise of violence in the workplace today also carries significant liability for employers. And yes, violence between employees does happen even in dental offices.

Even if a bad hiring decision does not lead to serious harm to the practice or employees, it almost always contributes to lost productivity, with accompanying stress and the associated costs of higher turnover.

Given the statistics and trends, and assuming you want to minimize your risks, incorporating reference and background checks as a standard part of the hiring process is no longer a question. These must be done and ideally done on every applicant before hiring.

Such checks help reduce problems associated with embezzlement, workers’ compensation claims, occupational licensing, and negligent hiring. Often, just knowing that a background check may be performed discourages applicants with a questionable background from applying.

Many employers believe that background checks are limited to criminal reports, but in fact background checks can consist of many different aspects. The comprehensiveness of the check depends on the position needing to be filled. The employer can incorporate any or all of the following items:

  • Reference check
  • Previous/current employment verifications
  • Social Security trace
  • Criminal report
  • Driving record search
  • Credit history
  • Bankruptcies, liens, judgments search
  • Education verification
  • Professional license verification
  • Civil court search
  • Workers’ compensation report

Reference checks

Reference checks are most often handled by employers, although there are professional services available, such as Bent Ericksen & Associates, to handle the task. In-house reference checks are not governed by any federal or state laws. On the other hand, reference checks outsourced to a third party are governed by the Fair Credit Reporting Act (FCRA). The specifics of the FCRA will be outlined later in this article.

Prior to conducting reference checks, ask the applicant to sign an “Authorization to Give References” form (contact our office and request Form No. 305). The form states, in part, that the prospective employee authorizes former employers, as well as any other individuals whom a prospective employer may contact, to provide any and all information concerning previous employment as well as other pertinent information. Further, by signing the form, the prospective employee releases all parties and persons from all liability for any damages that may result from furnishing such information as well as from the use or disclosure of such information by the former employer(s) or any of its agents, employees, or representatives.

When contacting former employers, you should inform them that you have a signed release and offer to fax it to them. They can then feel free to disclose factual information about a former employee’s job performance.

Background checks

Background checks, just like reference checks, can be performed in-house or be outsourced to a third party, which is commonly referred to as a Consumer Reporting Agency (CRA). Due to the expertise necessary to complete a thorough background check, most dentists use a CRA, such as Bent Ericksen & Associates, for completing their checks.

If you choose to perform background checks yourself, it will typically entail going to the county courthouse and having the public record documents pulled on the applicant in question. Other items like Social Security trace and driving record search would similarly involve contacting the appropriate agencies to obtain information. With the exception of credit checks, results from an in-house background check are not governed by the FCRA.

Credit checks, along with any and all reports including reference checks, obtained from a CRA are considered “consumer reports” and are governed by the FCRA.

Prior to conducting a background check with a CRA, the FCRA requires employers to:

  • Notify the applicant in writing that a report may be used.
  • Obtain the person’s written authorization before conducting a background check. The authorization must be on a document separate from all other documents.

Basic background check

A “basic background check” is recommended before hiring any employee, regardless of position, and would typically include:

  • Reference checking
  • Previous/current employment verification
  • Social Security trace
  • Criminal report
  • Driving record search

In addition to completing the basic background check, add the following searches when applicable:

  • Employment credit report when hiring an employee whose responsibility includes accounting or finances
  • Education verification and professional license verification when hiring an employee whose position requires license(s), certification(s), and/or specific educational background
  • All of the above, plus civil court search and bankruptcies, liens, and judgments search when hiring an associate or considering a potential partner or buyer

Adverse action

After reviewing the background check report, the employer may decide to take an “adverse action” based on the information. An adverse action is denying employment, terminating an employee, rescinding a job offer, or denying a promotion. Before taking adverse action, the employer must provide the individual with a pre-adverse action disclosure that includes a copy of the individual’s background check report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”

After taking adverse action, employers must provide an adverse action notice (orally, in writing, or electronically) to the individual. This document must contain:

  • The name, address, and phone number of the CRA that provided the reports
  • A statement that the CRA did not make the decision to take adverse action and cannot give specific reasons for it
  • A notice that the individual has a right to dispute the accuracy or completeness of any of the information the CRA furnished and his/her right to an additional free consumer report from the agency upon request within 60 days

Prior to eliminating an applicant based on a background check, consider the relevancy of the information. For example, an applicant may be a great receptionist at the practice even though a DUI is on his/her record from five years ago. But, an applicant who has an embezzlement conviction would likely be eliminated for a financial coordinator position.

As with any other personal data, keep information confidential and inform only relevant personnel of the findings.


In summary, bad hiring decisions can and should be minimized. Employers, now more than ever, need to redirect their hiring techniques and incorporate all of the recruiting methods available to them. Employers benefit when they conduct an appropriate reference or background check on any applicant they may want to hire.

A variety of background checking options is available from Bent Ericksen & Associates for employers who desire to improve their recruiting methods, increase their odds of hiring the right person the first time, minimize liability claims, and avoid the task of performing checks themselves.

Bent Ericksen is the founder and Tim Twigg is the president of Bent Ericksen & Associates. For more than 25 years, the company has been a leading authority in human resources and personnel issues, helping dentists successfully deal with the ever-changing and complex labor laws. Both authors are members of the Academy of Dental Management Consultants. To receive a complimentary copy of the company’s quarterly newsletter or to learn more about their services, contact them at (800) 679-2760 or at

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