Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Employers, workers may benefit from employee reference pool

18.11.2010
With employers increasingly reluctant to supply references for former employees in order to avoid legal liability, the creation of a centralized reference pool for workers may make labor markets in the U.S. more efficient, a University of Illinois expert in labor and employment law says.

Law professor Matthew W. Finkin says that not only do employees face challenges when securing references from past employers, but employers also expose themselves to lawsuits when they provide a reference.

"Employees benefit from references, but there's nothing in it for employers, especially since they're exposed to potential liability," Finkin said. "There are laws that protect the dignitary interest of workers – specifically, defamation and invasion of privacy. So the question becomes, 'Why would any employer bother giving a reference in the first place?' "

Not only do a growing number of employers not give an ex-employee a reference, Finkin said companies also prohibit employees who might know the former co-worker from giving a reference.

"The reason companies do that is that they don't want to be held liable for what the current employee may say," he said. "We have created an informational asymmetry, one that's a problem for workers."

What the U.S. needs, according to Finkin, is a reference pool for workers that's a legal safe harbor for employees but also allows workers access to the reference as well as recourse to challenge it through a neutral third party.

"In essence, we need to create a system that encourages the flow of accurate information with low transaction costs, where the parties are held harmless," he said.

According to Finkin, who studies comparative and international law at Illinois, a similar system exists in Germany, where employee references are legally mandated.

Finkin is quick to note that the German system, in which an employee is entitled to a written reference whether the employee quits or is fired, has generated a complex body of law, making such a system both logistically as well as politically impossible to transplant to the U.S.

"Although the German system is a tradition that goes back over a hundred years, there's no good reason why we shouldn't at least look to European law to show us there are alternate solutions to dealing with this problem," he said.

Although he doesn't recommend a wholesale adoption of a mandatory reference pool, Finkin says that adapting the German system to the business culture of the U.S. would enable a freer flow of accurate information in the labor market, thereby allowing companies to make more informed decisions about potential hires.

"As a country, we don't like mandates, so it would have to be a voluntary system," Finkin said. "It's also more government regulation, and in the U.S., we're living in a political environment where more regulation, even though it can make markets more efficient, isn't really appreciated."

The reference pool would be created at the state-level, and would be a voluntary system "so that if I put my references into the pool, I can draw references out," Finkin said.

"That would not only create a more efficient system for transmitting accurate information about candidates, it would also encourage the sharing of information while also insulating employers from liability, so long as the employee has the chance to determine that the reference is accurate and fair."

Although there's inherent risk in creating such a system – for example, employers dangling the promise of a reference in return for money – the reference pool would also provide recourse for employees to challenge the reference, including a hearing with an arbitrator to decide whether the reference is accurate and fair.

"This gives the employee an opportunity to clear their name," he said. "Labor arbitrators very commonly get cases involving entries into personnel files, so it should be a fast and inexpensive system."

While a number of states have crafted legislation to encourage employers to be more forthcoming about employee references, it's still far short of a mandate to provide references.

"What the states have done is essentially codify the existing law, and it's the existing law that creates the problem," Finkin said.

If businesses are hesitant to give references, then human resources departments are more likely to run background and credit checks on potential hires. Not only is the sleuthing into the private lives of workers more expensive for employers, and not to mention more invasive for workers, background and credit checks also suffer from inaccuracies that would expose employers to more potential legal liability, Finkin said.

"There are now four states – Illinois is one of them – that limit the use of credit checks as a screen for employment," he said. "For workers, it's a Catch-22: They get into debt because their houses are underwater, and then when try to get a job they can't because they have bad credit. There has to be a relationship between the job and the credit reference."

Finkin says the conspicuous lack of an efficient, transparent system for employee references is slowing down the churn of the labor market – in other words, if workers can't secure references, they can't get a new job.

"The bigger the labor pool, the pickier employers can afford to be," he said. "When the labor market was flush in the '90s, the amount of drug testing declined radically.

"Employers didn't want to know what was in your body; they just wanted to get warm bodies into jobs. That trend has reversed in this economy, and employers can afford to be much more selective."

Finkin's co-author is Kenneth G. Dau-Schmidt, of Indiana University. The research was published in the American Journal of Comparative Law.

Phil Ciciora | EurekAlert!
Further information:
http://www.news.illinois.edu/news/10/1117references.html

More articles from Studies and Analyses:

nachricht Real-time feedback helps save energy and water
08.02.2017 | Otto-Friedrich-Universität Bamberg

nachricht The Great Unknown: Risk-Taking Behavior in Adolescents
19.01.2017 | Max-Planck-Institut für Bildungsforschung

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Breakthrough with a chain of gold atoms

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

Im Focus: DNA repair: a new letter in the cell alphabet

Results reveal how discoveries may be hidden in scientific “blind spots”

Cells need to repair damaged DNA in our genes to prevent the development of cancer and other diseases. Our cells therefore activate and send “repair-proteins”...

Im Focus: Dresdner scientists print tomorrow’s world

The Fraunhofer IWS Dresden and Technische Universität Dresden inaugurated their jointly operated Center for Additive Manufacturing Dresden (AMCD) with a festive ceremony on February 7, 2017. Scientists from various disciplines perform research on materials, additive manufacturing processes and innovative technologies, which build up components in a layer by layer process. This technology opens up new horizons for component design and combinations of functions. For example during fabrication, electrical conductors and sensors are already able to be additively manufactured into components. They provide information about stress conditions of a product during operation.

The 3D-printing technology, or additive manufacturing as it is often called, has long made the step out of scientific research laboratories into industrial...

Im Focus: Mimicking nature's cellular architectures via 3-D printing

Research offers new level of control over the structure of 3-D printed materials

Nature does amazing things with limited design materials. Grass, for example, can support its own weight, resist strong wind loads, and recover after being...

Im Focus: Three Magnetic States for Each Hole

Nanometer-scale magnetic perforated grids could create new possibilities for computing. Together with international colleagues, scientists from the Helmholtz Zentrum Dresden-Rossendorf (HZDR) have shown how a cobalt grid can be reliably programmed at room temperature. In addition they discovered that for every hole ("antidot") three magnetic states can be configured. The results have been published in the journal "Scientific Reports".

Physicist Dr. Rantej Bali from the HZDR, together with scientists from Singapore and Australia, designed a special grid structure in a thin layer of cobalt in...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Booth and panel discussion – The Lindau Nobel Laureate Meetings at the AAAS 2017 Annual Meeting

13.02.2017 | Event News

Complex Loading versus Hidden Reserves

10.02.2017 | Event News

International Conference on Crystal Growth in Freiburg

09.02.2017 | Event News

 
Latest News

Switched-on DNA

20.02.2017 | Materials Sciences

Second cause of hidden hearing loss identified

20.02.2017 | Health and Medicine

Prospect for more effective treatment of nerve pain

20.02.2017 | Health and Medicine

VideoLinks
B2B-VideoLinks
More VideoLinks >>>