Negligent Hiring/Retention and Entrustment

Employers may be liable for actions an employee takes at work if it can be shown that the employer was negligent in hiring or retaining that employee. Employers should take a serious look and properly screen their employees to prevent negligent hiring, retention, and entrustment allegations. Background checks may reduce the likelihood of hiring the wrong person for the job and reduce the company’s exposure. A background check may help demonstrate that the employer did not act negligently if the check provided no reason for concern.

Background Checks. A background check is defined as one or a combination of reports collected about individuals for an employment purpose. It may include a credit history, criminal records, driving records, past employment, education, references, professional licenses, military service, social security number, substance abuse records, workers compensation, and other records. Other terms used to refer to background checks include reference checking and employee screening.

Purpose. Often a job application, resume, or interview does not tell an employer all the necessary information relevant to employment eligibility. In fact, some candidates falsify or exaggerate items on their resume or job application. That’s where background checks can be used as a revealing tool for more, and often more accurate, employment eligibility information.

Also, background checks are not always an option, but a requirement for certain positions. Examples include school bus and commercial motor vehicle drivers, law enforcement and security officers, childcare workers, patient care workers, teachers, and financial institution workers. Another reason to perform a background check is to avoid liability for negligent hiring. In some situations, employers may be liable for serious actions an employee takes at work if the employer was negligent in hiring that employee.


Before performing a background check, the employer will want to understand all the state and federal laws and regulations related to background checks. One very important law is the Fair Credit Reporting Act. 

Basically, this act protects prospective employees, existing employees, and other individuals by requiring employers to follow certain steps, including obtaining the individual’s written consent when obtaining a consumer report from a consumer reporting agency. There are some exemptions when investigating employee misconduct.

Where to Look

When performing a background check, there are a number of places to look for information, including, but not limited to:

  • Resume, application, and interview;
  • Personal references;
  • Federal, state, and local government agencies;
  • Educational institutes;
  • Previous or current employers;
  • Professional organizations;
  • Online databases; and
  • Consumer reporting agencies


One snag employers run into with background checks is concern about liability for defamation. Many former employers decline to respond to questions about a prospective employee or they provide minimal information because they are concerned that the employee may bring suit for defamation if they say something negative. Although truthful statements will not support a defamation claim, the employer may have to prove the statements are true. To remedy this, some states have passed job reference immunity laws which provide protection for good faith statements.

What information can we give to an employer requesting a reference on one of our current or past employees?


This can be a tricky situation. On one hand, you don't want to withhold potentially crucial information (i.e., employee has a history of workplace violence). On the other hand, you don't want to risk a defamation lawsuit. Most employers adopt a policy of providing only factual information related to the dates of employment, job title, etc., unless the employee is a threat to others.

Whatever your policy, below are some tips to consider:

  • Only give out job-related information.
  • Document all referenced given.
  • Don't volunteer information.
  • Get a written release for references beyond basic information such as dates of employment, job title, etc.
  • Check state laws for reference checking requirements or waiver of liability.
  • Be truthful and give objective facts.


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