What is Employment Verification?
Employment verification is the process of proving current or past employment, whether on the part of an employee or an employer.
The reasons a party may seek employment verification range from verifying income information to evaluating a potential new hire’s qualifications for hiring purposes. The information necessary varies based on the needs of the party requesting the information, but it typically includes the employee’s job title, salary, responsibilities and dates of employment.
Why employment verification is important
Companies or individuals may seek to verify employment for a number of reasons. Several common scenarios include:
1. Lenders originating a loan
Lenders’ primary interest is your ability to make timely payments per your loan agreement. It’s illegal in some states for future employers to request your current salary information, but a lender can require proof of your earnings to evaluate your creditworthiness.
2. Property owners issuing a lease
Like lenders, property owners will want to make sure you’re able to cover your lease payments. Property owners will take into account other assets like savings and residual income, but your monthly take-home pay is the most relevant piece of information for them to gain insight into your ongoing financial situation.
3. Work visa holders validating their employment
Work visas typically require a visa holder to maintain employment for the duration of their stay in a host country. In some cases, visa holders may be allowed to switch to a new position while maintaining their visa. Applicants and visa holders must be proactive about the requirements for their stay in order to avoid deportation or otherwise losing their work verification.
Verification for employers
Employers may both initiate employment verification and receive requests to verify the past or current employment information for someone on their staff. Several situations may prompt an employer to request an employment verification, including making hiring decisions and salary negotiations.
1. evaluAting potential recruits
Candidates for open roles will likely provide their employment history in a resume or CV, but employers may want to check on the accuracy of those attestations. A potential new hire’s work history will provide valuable context for the rest of the recruitment process, providing credibility to their experience and qualifications, and allowing any discrepancies or misrepresentation to be discussed during interview.
2. Making appropriate salary offers
In certain states, like New York and California, employers are barred from releasing information about salaries and other payments to employees. While local laws vary as to whether employers can release salary information for their workers, in some areas, a potential employer may be able to request proof of a recruit’s past pay in order to extend them an appropriate offer. This information can also provide a helpful benchmark for companies looking to better understand how competitors handle compensation.
Methods of employment verification
The most common method for employment verification is a Proof of Employment Letter issued by a past or present employer. Usually issued on a company’s letterhead, the Proof of Employment Letter provides a reliable attestation to a worker’s history with the company in question.
The formatting for Proof of Employment letters will vary, but the most pertinent information to include is Job Title, Dates of Employment and occasionally, the employee’s responsibilities.
Other methods for proving employment include the following:
- Contracts & Agreements — A signed contract indicating an employee’s role with the company in question can serve as adequate proof of employment, though it’s most relevant for a worker’s current role, as it usually says nothing about date of termination or resignation.
- Pay stubs — Providing pay stubs is a less formal way to prove employment, as there’s no information included about the dates an employee works for an organization. This method of proof is more relevant when salary and earnings questions come into play, such as originating a new lease or a loan or credit card application.
- References — A verbal confirmation of employment can suffice for some third parties, but it hinges upon the references’ timely reply. Employees may also not adequately notify references that they’ve been listed, which can create awkward situations for all involved.
- Third-Party Services — Companies like Truework can dramatically simplify the employment verification process for employers.
The impact of employment verification
Employment verification is a crucial step required in many high-stakes situations, such as an employee securing a loan for a new home. Lenders and other third parties also need to ensure that they have an adequate picture of a candidate’s earnings to protect their bottom line. Every employment verification has its own purpose, so it’s essential for those looking to prove their work history to understand the information required by the party requesting verification.
Learn more about Truework
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