Reference checks are a useful way for employers to gather information about applicants that they might not discover through the application and interview process. However, despite the usefulness of reference checking, many employers are legitimately concerned about lawsuits from former employees on the basis of 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 creates a catch-22 for employers. There is a detailed discussion of these legal issues.
To deal with employers' reluctance to provide information about former employees, a number of states have enacted laws “immunizing” employers against employee claims over such disclosures. The immunity laws generally provide protection from claims by former employees for defamation of character.
Indiana has a reference immunity law. Under Indiana law, employers are immune from liability for disclosing information about a current or former employee, unless it is proven by a preponderance of the evidence that the information disclosed was known to be false at the time the disclosure was made (IN Code Sec. 22-5-3-1).
Within 30 days of receiving a written request from a prospective employee, a prospective employer must provide copies of any written communication with the prospective employee's current or former employers if those communications might be relied on in the hiring decision. Therefore, employers should keep in mind that any written references will not be confidential.
Practical advice. Even with a reference immunity law, employers in Indiana should consider taking precautionary measures when giving references, ...