CORINNE A. MARASCO, C&EN WASHINGTON

Seymour Schlager's résumé was very impressive. According to his résumé, he was a doctor and a lawyer and also had a Ph.D. in microbiology. He had been head of AIDS research at Abbott Laboratories and also worked for Academic Pharmaceuticals, a small pharmaceutical research company. In 1998, Becton Dickinson hired Schlager as a medical director--then fired him three years later, after a routine check of his credentials uncovered several misrepresentations that he had made when he was hired.

What Schlager did not disclose at the time he was hired was that he had spent six years in prison for the attempted murder of his wife and that his medical license had been suspended as a result of the conviction. He earned his law degree through correspondence courses while he was in prison. When he applied for membership in the American College of Forensic Examiners, a professional society of expert witnesses, he attested that he had never been convicted of a felony and that he was on sabbatical from his job and was a law student. His address was the inmate mail address at the state prison.

Becton Dickinson admits that it did not conduct a background check prior to hiring Schlager. Had the company done even a simple Internet search, it would have discovered news of his conviction in Chicago-area newspapers.

Reference checking is a critical tool in the selection process. Many companies conduct some form of background check--69%, according to the Society for Human Resource Management--yet there are still plenty of candidates who are hired by companies that have made no or few inquiries into their backgrounds. The really high-profile cases find their way into the headlines.

The most common résumé inaccuracies include changing employment dates, falsely claiming to have attended a university or earned a degree, claiming job titles that are more impressive than the actual ones, listing accomplishments that can't be verified, and claiming to hold valid credentials that are no longer valid or are valid only in the issuing state.

Consider this statistic from Automatic Data Processing (ADP), a provider of payroll and other human resource services: 44% of the 2.6 million background checks it conducted in 2001 contained discrepancies between information provided by applicants and their past employers, and 41% uncovered discrepancies in educational information. A recent survey conducted by the New York Times job market research team found that 89% of job seekers and 49% of hiring managers believe that a significant number of candidates inflate their résumés.

Elaine Palome, director of employment at Woburn, Mass.-based ArQule Inc., a drug discovery company, says: "We perform a reference check to determine job-related strengths and developmental needs once we have decided that we have a candidate of choice. If the reference check is satisfactory, we may perform a criminal background check."

Bad hires are expensive: It costs $7,000 to replace a salaried employee, $10,000 to replace a midlevel employee, and $40,000 to replace a senior executive, according to Recruiting Times. What's more, those figures easily exceed the costs of screening applicants before they are hired. Carol Keene, director of central staffing at Air Products & Chemicals, estimates that the company spends an average of $100 per applicant to conduct a background check, which does not include the cost of drug testing.

The data underscore the importance of checking references, but getting them is easier said than done. People who are asked to provide references for prospective hires are reluctant to communicate frankly, either verbally or in writing, about past employees. Concern about legal action has led most companies to institute a "name, rank, and serial number" policy under which the only information discussed is job titles, employment dates, and salary history.

Although the courts aren't exactly overrun with reference-related litigation, employers' fears are not totally unfounded. "In the early 1980s and 1990s, there were a number of lawsuits and judgments where former employees sued for defamation based on references," says Wendy Bliss, an attorney, consultant, and author of "Legal, Effective References: How To Give and Get Them" (Alexandria, Va.: Society for Human Resource Management, 2001). "Employers established name, rank, and serial number policies as a way to minimize potential liabilities for references."

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COMPANIES CAN be held legally liable for negligent hiring if they fail to take reasonable steps to uncover if an applicant is unfit. According to Bliss, there have been highly public cases in which previous employers have given misleading references that don't say anything negative about a worker who has demonstrated dangerous tendencies, and then that worker caused harm at the subsequent employer's company. Companies are also concerned about being sued for defamation by former employees who are unhappy with what their former employers said about them.

Concerns over negligent hiring and restrictive reference policies have led to a Catch-22 in checking references. "Companies that are eager to get information on job applicants are also reluctant to reveal too much information about their former employees, so the golden rule is not working here," Bliss observes.

Name, rank, and serial number policies also don't help good employees who want facts to substantiate their positive track record. So where is the balance between providing an effective reference and reducing exposure to legal risk?

In general, employees who are leaving a company may be asked to sign a waiver allowing the company to provide more information other than name, rank, and serial number when called for a reference. Also, companies such as ArQule and Air Products ask candidates to sign a waiver giving the company permission to confirm information supplied on a job application and to perform a more thorough background check.

REFERENCE IMMUNITY laws are another attempt to strike this balance. About 35 states have passed such laws, which vary from state to state. In general, state reference laws essentially protect employers from civil liability if they give good-faith references or negative truthful information. Employers who knowingly disclose information that is false or misleading are not protected under these laws.

The challenge for job seekers is finding out if the references have been made in good faith. Job seekers can use a paid reference-checking service to verify what references are being given about them. If they discover that the information is not accurate, a "preponderance of the evidence"--a legal standard for most civil cases--is typically needed to show bad faith under reference immunity laws.

Job seekers should be prepared for a thorough check of their references and backgrounds and should know that they will be asked to explain red flags to employers, for example, if they were fired from their last job. "Sept. 11, 2001, heightened awareness among employers that they need to investigate the backgrounds of applicants before making an offer," Bliss says. In her seminars, Bliss says she hears from employers who want to share more information about former employees, but most are still very cautious about giving out substantive, qualitative information.

Misleading information on résumés can lead to losing a job offer or terminating employment, and the odds of getting caught have increased significantly for two reasons: Sept. 11, which reinforced the need for background checks, and the Internet. The Internet and electronic communications have made the screening process faster and easier. Many public records and other relevant information are available online from government agencies, pre-employment screening services firms, or credit bureaus; however, the real savings is the faster turnaround time.

Palome agrees that the Internet has made conducting background checks easier. ArQule uses Avert, ADP's screening and selection service, which is one of many Web-based systems available to companies.

Bliss adds: "This heightened concern for safety and security is going to lead employers to be more intrusive than in the past. People need to understand that the purpose is to provide a safe and secure work environment."

Bliss acknowledges that many job seekers find it hard to resist the temptation to pad a résumé in a tight job market, especially if a candidate perceives that it will give him or her the edge and that the odds of getting caught are small. "It all comes down to facts," she says. "Self-promotion involves putting the actual facts in the most effective way possible, using action verbs and quantifications. Getting a job is about marketing yourself in the most positive light, but there is a difference between putting your best foot forward versus reinventing your history."

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BE PREPARED

Laying Groundwork For Reference Checking Pays Off In The Long Run

One task that job seekers tend to give short shrift to is deciding whom they will use as references for potential employers. So often, they focus on writing résumés and cover letters, researching companies, and preparing for interviews. Askingpeople to be references becomes anafterthought.

There is value to choosing the right people to be references. Having good references can boost your chances of landing a job, whereas a bad or even halfhearted reference could cost you a job offer. Here are some tips to keep in mind.

• Never list names of references on your résumé. If you hand out a list of references early on in the application process, your references could be called before you've had a chance to tell them about the job.
• Think about whom you want for references. You want people who know your strengths and are willing to provide a positive reference about you. Former coworkers, clients, supervisors, and others who know your work are good choices. For new graduates, former professors and mentors are good references.
• Ask someone's permission before using him or her as a reference. Most people are usually flattered by the request, but it's polite to ask anyway in case someone declines.
• Make sure you have your references' current contact information. This will help the reference-checking process go smoothly.
• Cultivate your references by keeping them informed about your job search. If you're interested in a job and have been asked to provide references, call each reference to let him or her know that the company will be calling. Tell them about the job you're interviewing for, and make sure they know your key accomplishments and skills as they relate to the position. This way, they can give the potential employer the best information possible about your ability to do the job.
• Thank your references for their help when your job search is complete. They were willing to help you, and you may need them again or return the favor in the future.

In addition to personal references, keep copies of your performance appraisals to back up claims of good performance. Retaining copies of performance appraisals is even more important when a company has merged or gone out of business. If you know in advance that the company is going out of business, ask for a letter of recommendation. Also, try to keep in touch with former supervisors; all the constraints associated with giving a reference are removed if the company no longer exists.

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