How To Provide Employment Verification
Employment verification is an important part of HR processes in which an employer confirms the status of an employee’s job history and details. This is required for purposes like applying for a loan for a new home or car.
While employment verification is a critical process, it can also be time-consuming for HR departments. When companies can outsource this work to a team they trust, they save time and resources and can also improve data security. Let’s explore the basics of employment verification and what options companies have to provide this service.
Understanding the Basics of Employment Verification
Definition of Employment Verification
Employment verification, sometimes called an employment history check, aims to confirm the accuracy of employment details and work history provided by a job applicant. This is done by contacting employers to confirm:
- Employment dates
- Job titles and responsibilities
- Salary
- Reason for leaving the job
An employment verification checks that the candidate worked where they said they did, held the job title listed and performed the duties described. This helps other parties confirm that candidates are honest in representing their backgrounds.
The Importance of Employment Verification
Conducting employment verification is critical for several reasons. Let’s say an employee is trying to take out a loan. Employment verification in this scenario is important because:
- Income Verification: Lenders need to assess an applicant’s ability to repay the loan. By verifying employment, they can confirm the individual’s income, which is a critical factor in determining whether the applicant can afford the loan payments.
- Risk Assessment: Lenders use employment verification to assess the risk associated with lending money to an individual. Stable employment and a consistent income history indicate a lower risk of defaulting on the loan.
- Fraud Prevention: Verifying employment helps prevent fraudulent loan applications. Some individuals may provide false information about their employment or income in an attempt to qualify for a loan they wouldn’t otherwise be eligible for.
- Loan Approval: Employment verification is often a requirement for loan approval. Lenders want to ensure that borrowers have a reliable source of income to make timely payments.
- Loan Type and Terms: The terms of a loan, such as the interest rate and loan amount, can be influenced by the applicant’s employment history and income. A stable job history and higher income might lead to more favorable terms.
- Legal and Regulatory Compliance: Lenders are often required by law and regulatory authorities to verify borrowers’ information before extending credit. This is part of responsible lending practices.
- Debt-to-Income Ratio: Lenders use the debt-to-income ratio to assess a borrower’s financial health. This ratio compares a borrower’s monthly debt payments to their monthly income. Employment verification helps accurately calculate this ratio.
- Identity Verification: Verifying employment can also help confirm the borrower’s identity and prevent identity theft or impersonation.
Who Can Request Employment Verification?
There are several parties that may require employment verification:
- Lenders: Banks or mortgage companies may verify employment before approving loans.
- Government Agencies: Social service programs require proof of employment eligibility.
- Background Screening Firms: Third-party companies hired to conduct employment verification checks.
Employment verifications are typically requested by an employer or agency, and individuals do not normally have to verify their employment. Specific protocols must be followed when requesting employment verification to respect employee privacy.
Steps to Quickly and Easily Provide Employment Verification
For employers on the responding end of employment verification requests, here are some tips to provide information efficiently:
Keep Information Organized
One of the keys to ensuring your employment verification process is streamlined is keeping your employee information organized and secure. This includes information like:
- Name of the applicant whose employment is being verified
- Positions the individual held at your company
- Employment dates, titles, responsibilities, and salary details
- Reason for separation from the company
Having this information organized makes it easy to work with an employment verification company for this service in a streamlined and secure way.
Using Employment Verification Services
Many companies utilize third-party employment verification services to handle inquiries. By using a third-party service, your company can reduce the labor burden on your HR staff, reduce corporate liabilities, and ensure employee data security. These services save time and effort in managing verifications internally. With employment verification services:
- Trained specialists verify employment details.
- Secure electronic systems are used to collect and transmit data.
- Verifications comply with industry regulations and standards.
- Online portals allow 24/7 access and status tracking.
Reputable employment verification providers offer quick turnarounds while reducing administrative work for employers. Employment verification ensures candidates have accurately represented their professional background. Following proper protocols helps protect employee privacy while providing the necessary information. At Vault Verify, we offer no-cost, fully compliant employment and income verification services that reduce data exposure by 99%.
Tips to Make Employment Verification Process Efficient and Error-Free
Whether you use a third-party service or are considering it as an option, there are tips to remember to ensure your verification process is secure and efficient.
Ensuring Privacy and Security of Employee Information
It’s important to balance the need for transparency with an employee’s right to privacy. Only provide information that is directly relevant and necessary to validate employment status. For example, avoid disclosing details about an employee’s job performance, salary information beyond confirmation of title and dates of employment, or personal characteristics that could violate EEOC guidelines. A reputable third-party verification service can help ensure that only the necessary information is given to the requesting party.
Importance of Prompt Response to Verification Requests
Employment verifications are often time-sensitive and required as part of a candidate’s loan application. Delayed responses could negatively impact your former employee’s prospects. Ensure the third-party service you work with has standardized processes that handle requests promptly. Generally, you should respond to all verifications within 24-48 hours.
Legal Considerations in Providing Employment Verification
As an employer, there are legal considerations to keep in mind when providing employment verification.
Adhering to the Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act regulates employment background checks performed by third-party agencies. It applies to verification requests from credit agencies, government agencies, or other entities outside the normal hiring process. FCRA mandates that employers obtain an employee’s written consent before responding to these verification requests.
Employers must also share details like the nature of the request and the requesting party’s identity. Strict procedures protect employee privacy rights. Under FCRA guidelines, employment verifications must ensure appropriate consent forms are used and background check disclosures are provided.
Complying with Equal Employment Opportunity Commission (EEOC) Guidelines
Employment verification disclosures must not violate EEOC guidelines around unlawful discrimination. Ensure you have policies limiting the exposure of protected class information like age, race, gender identity, or health conditions unless mandated by specific laws. Questions about salary history can also be flagged as discriminatory and should be avoided.
Train HR staff to be compliant with EEOC regulations when handling sensitive employee information. Make sure disclosures don’t directly or inadvertently reveal protected class details that could facilitate discrimination against former employees.
Understanding State and Federal Laws on Employment Verification
While federal laws like FCRA and EEOC requirements establish baseline regulations, individual states can also enact laws around employment verification disclosures. Be aware of state-specific regulations like mandating salary disclosure or limiting criminal history checks that may impact policies.
Consult with legal counsel to ensure your verification procedures comply with the latest federal and state-level employment laws. Update internal policies and HR training programs accordingly to keep verification practices current.
About Vault Verify
If you’re seeking a third-party provider to handle income and employment verification requests, look to Vault Verify. Our employment verification service streamlines the process of confirming a team member’s employment history and qualifications, saving your in-house team time, money, and resources.
Not only do we provide fast, reliable employment verification, but we prioritize data security. It’s common practice for companies to download and share employment history data with VOE/VIO providers. However, only about 1% of that data is needed, meaning duplicating a company’s payroll data in a third-party system is inherently insecure.
At Vault Verify, we provide real-time interfaces with multiple payroll systems to create secure and robust employment verification programs for our clients. Our system takes data security even further by redacting personally identifiable information after 30 days and removing it entirely from our systems after 90 days. Vault Verify uses a company’s personnel information only to provide verifications of employment and income.
If you’re seeking a secure, speedy, and reliable employment verification solution, look to Vault Verify. Our 99% client retention rate demonstrates our commitment to putting you first. Request a sales demo today to get started.
Frequently Asked Questions
What details can I provide for employment verification?
Most companies restrict verification to basic employment details like dates employed, job titles, salary confirmation, and reason for departure.
Do I need the employee’s permission for verification?
You should always verify that the employee consented to release their information through a written authorization form or verbal confirmation. Employee consent protects privacy.
What if an employer asks for more details than I’m allowed to provide?
Politely decline to provide any details not permitted by company policy. Refer the requestor to the employee or publicly available information if more details are needed.