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Conducting Reference Checks Without Running afoul of Privacy Legislation

Conducting reference checks is a critical part of the hiring process. However, given the existence of privacy legislation that restricts employers’ ability to collect, use, disclose and retain personal information, such checks are not always clear-cut. Private sector employers in British Columbia, Alberta and Québec, as well as federally regulated employers, are subject to personal information protection legislation.

Even in jurisdictions without privacy legislation, employers should be cognizant of Canada’s growing privacy culture and the expectation of many applicants for employment that prospective employers will safeguard their personal information. All employers are cautioned to incorporate developing privacy laws into their employment practices, including reference checks.

Q. How does personal information protection legislation impact upon an employer’s ability to conduct reference checks?

A. Under such legislation, consent is generally required before collecting or disclosing a person’s personal information. This includes collecting, using or disclosing an opinion about the person. In British Columbia and Alberta, however, "employee personal information" is dealt with differently.

Q. How is "employee personal information" dealt with in British Columbia and Alberta?

A. Alberta and British Columbia’s Personal Information Protection Act (PIPA) allows employers to collect, use or disclose "employee personal information" without the consent of the employee or the prospective employee if it is reasonable for the purposes of establishing, managing or terminating an employment relationship. As a result, the prospective employer does not require the applicant’s consent when conducting a reference check.

Q. Are there any obligations on employers in British Columbia and Alberta when conducting reference checks?

A. Yes. Employers must give the applicant advance notice that it intends to contact previous employers or conduct background checks, explain to the applicant in advance the purpose for collecting, using or disclosing the information (i.e., to make a hiring decision), and make certain that the collection and use of the information is "reasonably required" for the establishment of the employment relationship (i.e., to assess the applicant’s fitness for the job).

Q. Is it advisable for employers to obtain consent even if not strictly required?

A. A prospective employer may still wish to obtain written consent, particularly if the prospective employer anticipates calling past employers who are not listed as referees.

Q. If an applicant lists a former employer as a referee, has the applicant consented to the prospective employer contacting that referee?

A. In such circumstances, the applicant will be considered to have implicitly consented to that former employer disclosing his/her employee personal information to the prospective employer. However, if a former employer is not listed as a referee, then that former employer may be in breach of the PIPA if it discloses the applicant’s employee personal information without consent.

Q. How can employers avoid being in breach of the PIPA in this respect?

A. To avoid any potential breaches, employers are advised to obtain an applicant’s consent up front to contact persons other than those listed by the applicant as referees. This consent could be requested on the job application form.

Q. Once the personal information has been collected, used or disclosed in the application process, are there other PIPA requirements that apply to that information?

A. Yes. Employers are required to make reasonable efforts to ensure the personal information collected is accurate and complete, undertake reasonable security arrangements to protect the collected information from unauthorized use, disclosure or destruction, and retain information used to make a decision for at least one year after its use so that the applicant has a reasonable opportunity to obtain access.

Q. Is an applicant entitled to obtain the information used by an employer in the decision-making process?

A. Although there are some exceptions, an applicant is generally entitled under the PIPA to access his/her personal information that is under the control of the prospective employer, as well as information about how his/her personal information has been and is being used by the prospective employer, and the names of individuals and organizations to whom the personal information has been disclosed.

Q. What other tips should employers follow when conducting reference or background checks?

Avoid violating human rights legislation — When conducting background checks for education, previous employment and criminal records,1 employers must comply with human rights legislation in the applicable province. Employers are restricted from basing hiring decisions on prohibited grounds such as race, creed, ethnic origin and criminal record.

Beware of differences between the provinces — Employers need to be cognizant of the province in which the employee will be employed. In Ontario, an employer can refuse employment to an individual convicted of a Criminal Code offence for which a pardon has not been granted, regardless of the prospective job and/or the type of offence. In British Columbia and Québec, however, an employer can only refuse employment to an individual convicted of a Criminal Code offence for which a pardon has not been granted if the offence for which the individual was convicted is related to the intended employment.

Consider the timing of any background check — As there is always a risk of learning information about a prohibited discriminatory ground in a background check, consider performing the background check only after a conditional offer of employment has been made to the candidate.

Understand the activities of your background check provider — Because of the agency relationship between a prospective employer and a background check provider with which it has contracted, a prospective employer may be liable for any unlawful acts committed by a background checker, including with respect to unlawful discrimination and breaches of privacy. Ensure that your background checker is aware of its legal obligations and has measures to reduce liability.

Keep good notes — Record the information requested and provided during reference checks, and retain those notes in an employee’s file for at least one year for applicants not hired.

Always follow through — If you make an offer of employment conditional on a positive reference check, do not allow the employee to begin work until the results of all reference checks have been received and reviewed. If you cannot wait for the results, consider inserting a clause in the employment contract that gives you the ability to terminate the employee’s employment for cause in the event that the results of the reference check are unsatisfactory.

Important Note

Employers in Alberta should be aware that Bill 54: Personal Information Protection Amendment Act, 2009 has received Royal Assent. At the time of writing, it is not yet in force. Bill 54 contains changes to Alberta’s PIPA. The changes, in part, expand an employer’s ability to collect, use or disclose "employee personal information" without an individual’s consent to include the scenario whereby that information is collected, used or disclosed for the purpose of "managing a post-employment" relationship. Once Bill 54 becomes law, organizations will not be required to notify former employees of the disclosure of employee personal information to prospective employers, although it may still be prudent to do so in certain circumstances. For more information on Bill 54, see the "Privacy Report: Bill 54 Proposes New Notification Requirements for Privacy Breaches and for Using Foreign Service Providers," by Erika Ringseis and Matthew Wanford in this edition of the LEQ.

1 For more information, see our National Report: Pre-Employment Screening: Changes to the Criminal Records Check Process.