Reference checks are a useful way for employers to gather information about applicants that might not be discovered through the application and interview process. However, despite the usefulness of reference checking, many employers are legitimately concerned about lawsuits from former employees based on information provided in response to a request for a reference, and liability for the actions of employees where the company failed to conduct a thorough reference check. This can create a quandary for employers.
Employers are also concerned about liability for the actions of employees where the company failed to conduct a thorough reference check. California, like many states, has recognized the tort of negligent hiring (Doe v. Capital Cities, 50 Cal. App. 4th 1038 (1996)). Employers may be liable for intentional or negligent acts of an employee if they knew or should have known of an employee's dangerous propensities. Therefore, employers should be diligent in conducting reference and background checks on new employees, particularly when the job involves contact with the public.