Actual Case 1: An employer offered a maintenance job to a job applicant after a partial background check which showed no problems. The applicant immediately gave the applicant's present employer a notice to quit. The new job was scheduled to start a week later, with no written employment contract or any other specific minimum employment term. Two days later, the employer heard from another employee "through the grapevine" that the new employee had been fired by a prior employer for theft (which was allegedly caught on videotape!).

     Actual Case 2: An employer offered an office manager job to a job applicant after a partial background check which showed no problems. The new job was scheduled to start a week later, with no written employment contract or any other specific minimum employment term. The next day, the employer heard from an acquaintance of one of the owners that the employee had been fired from a previous office manager job because "she could not handle it."

     These cases raise a common issue: Suppose that before an employer completes its background check of a job applicant, the employer offers a new employment position to the job applicant, the applicant accepts the offer and, in anticipation of starting the new employment, quits the applicant's prior employment, and thereafter the employer finds out alleged adverse information about the applicant. Can the employer withdraw the offer of employment or delay the new employee's starting employment date? If so, what exposure to legal claims does the employer have? What should the employer do?

     In general, an employer determines what background or reference checks, if any, of a job applicant the employer will use in its hiring process. Of course, any such background or reference checks cannot be undertaken in a discriminatory manner. Also, such checks must be undertaken in compliance with the Fair Credit Reporting Act, if applicable, and completed before any physical examinations may be used, but other than that an employer's use of background or reference checks is discretionary with the employer.

     In times of tight labor markets, sometimes employers are tempted to make job offers before all required background or reference checks are completed. Such a job offer may result in an offer being made before adverse information about an applicant is learned. When alleged adverse information about an applicant is received after the applicant has been offered and accepted employment, the employer may find itself in a difficult situation.

     An employer may handle such a difficult situation this way:

     1. Delay The Employment Start. Except in very unusual circumstances, a withdrawal of a job offer on the basis of only hearsay information will seem too harsh, so an employer should advise the new employee that the employee's start date will be delayed while the alleged adverse information is investigated. If the employee must start work, or if the employee has already started work, then the employer should advise the employee that the employee's continued employment is subject to the outcome of the investigation.

     2. Confront the Employee. An employer should start by confronting the employee with the alleged adverse information. During such a confrontation the employee may make admissions or convincing denials, or the employee may withdraw the application for employment, any of which may eliminate the need to do a further investigation. Advise the employee of the nature of the alleged adverse information and obtain the employee's response to the information and the employee's version of relevant events. At a minimum, ask the employee directly to explain in detail any and all alleged adverse information and the circumstances surrounding the termination of the prior employment (Did the employee quit? Was the employee fired? Was the parting a "mutual" termination? What happened and why? etc.). An employer may ask an applicant to furnish to the employer further references in addition to those previously furnished.

     3. Investigate Further. After meeting with the employee, the employer should investigate the alleged adverse information properly by following-up with the employee's former employers and other sources of information. Obtain from the employee and use a specific written authorization for disclosure of information about the employee. Meet with the employee again, if necessary, to discuss any new information obtained from this investigation.

     4. Decide What To Do. The final step is to make a decision to proceed with the new employee's employment or terminate the employee's employment.

     5. Possible Legal Claims. The main legal risks for the employer arise out of the termination of the employee's new employment. However, Maine is still an "employment at will" state. Assuming that the new employee has no written contract and was not promised employment for a particular term (which is the most common situation), the new employee cannot bring against the employer a valid claim for breach of employment contract or wrongful discharge. This is true even if the new employee quit a prior job because the employee was offered new employment with the employer. Stearns v. Emery Waterhouse Co., 596 A.2d 72(Me. 1991)(alleged "promissory estoppel" employment contracts are not recognized in Maine). The employee may have claims for defamation or invasion of privacy against a former employer or other sources of information, but the employee will have no such claims against the new employer.

DISCLAIMER: All information is provided for educational or promotional purposes only and not as legal advice on a particular matter. The information is provided AS IS with no warranties of accuracy, completeness, merchantability, or fitness for a particular purpose. Providing this information DOES NOT create an attorney-client relationship between Lawrence C. Winger, Esq. and the reader. All information is Copyright (c) Lawrence C. Winger, Esq. 2000 All Rights Reserved.

January, 2000