Hiring the right employee is a critical step in building a successful business. Reference checks can offer valuable insights into a candidate’s past performance, reliability, and interpersonal skills. However, in Ontario, the process of conducting or responding to reference checks is governed by a complex interplay of privacy laws, employment standards, and human rights legislation. Employers who fail to comply with these legal boundaries risk reputational damage and exposure to legal liability.

This blog explores the legal landscape surrounding reference checks in Ontario, including best practices, privacy considerations, and guidance on how employers can comply with the law.

What Is a Reference Check?

A reference check is typically a conversation—often informal—between a prospective employer and a former employer, manager, or colleague of a job applicant. The purpose is to verify information provided by the applicant and gather additional insights into their qualifications, experience, character, or workplace behaviour.

In Ontario, reference checks may be conducted before or after a conditional offer of employment, depending on the employer’s hiring process. Regardless of when they occur, these checks involve the sharing and collection of personal information, which triggers several legal obligations under provincial and federal privacy laws.

Privacy Laws Governing Reference Checks

The primary privacy law applicable to most Ontario private-sector employers is the Federal Personal Information Protection and Electronic Documents Act (PIPEDA). While Ontario does not yet have a comprehensive provincial privacy statute for private-sector employers (unlike provinces such as Alberta, British Columbia, and Quebec), PIPEDA governs the collection, use, and disclosure of personal information in commercial activities.

Under PIPEDA, personal information includes any information about an identifiable individual. This encompasses employment history, job performance, disciplinary actions, and opinions expressed by others about the individual. When conducting a reference check, employers must collect, use, and disclose such information only with the individual’s knowledge and consent, unless a legal exception applies.

In addition to PIPEDA, certain reference check practices may also raise issues under Ontario’s Human Rights Code, the Employment Standards Act, 2000 (ESA), and common law duties owed to former and prospective employees.

Consent: A Legal Requirement, Not a Courtesy

One of the most critical legal principles in conducting reference checks is the requirement of informed consent. Under PIPEDA, an employer must generally obtain an individual’s meaningful, voluntary consent before contacting references or sharing information with a prospective employer.

For the hiring employer, this means:

• You should only contact references listed or authorized by the candidate.
• You must inform the candidate of your intention to contact those individuals.
• Ideally, you should obtain written consent and specify the nature of the information to be collected or shared.

Consent is equally important for the employer providing the reference. Unless you have clear evidence that the former employee has consented to the disclosure, offering detailed commentary, especially negative, may constitute a privacy violation or even defamation.

Risks for the Reference Provider

Employers who provide references—especially verbal ones—must tread carefully. Common legal risks include:

• Breach of privacy: Disclosing personal information without consent can lead to complaints under privacy laws.
• Defamation: Providing untrue or harmful information that damages the individual’s reputation can result in a lawsuit, even if the comments were made in good faith.
• Negligent misstatement: Giving false or misleading information that causes harm to the prospective employer (for example, falsely praising a candidate who turns out to be unfit) can lead to legal liability.
• Human rights violations: Making discriminatory comments—consciously or unconsciously—about a candidate’s race, gender, disability, religion, age, or other protected ground can expose both the reference provider and the hiring employer to legal consequences under Ontario’s Human Rights Code.

These risks are magnified in the absence of a clear policy or documented process. Informal, off-the-cuff references based on memory or emotion can be especially problematic.

Risks for the Hiring Employer

Employers conducting reference checks also face legal exposure. Key risks include:

• Collecting personal information without consent violates privacy laws.
• Relying on discriminatory information, such as a reference suggesting the applicant had “too many sick days” (potentially raising disability issues) or “wasn’t a good cultural fit” (which could be code for unlawful bias).
• Failing to verify the accuracy or fairness of the reference, particularly where it forms the basis for rejecting a candidate.

Employers should be cautious about making employment decisions based solely on negative or vague references, especially when the information has not been corroborated or was disclosed improperly.

What You Can (and Should Not) Ask

The content of reference checks is another area where legal boundaries apply. Questions should be focused on job-related qualifications, performance, and responsibilities. Avoid any inquiries that touch on protected grounds under the Ontario Human Rights Code, such as:

• Age
• Marital or family status
• Sexual orientation or gender identity
• Disability
• Race or ethnicity
• Religion
• Political beliefs or affiliations

Even asking indirectly about such matters can create liability. For example, asking whether a candidate “had any issues with absenteeism” could be problematic if the absences were due to a disability. Likewise, asking if the candidate would “fit into a young, energetic team” could be viewed as ageist.

Documenting the Process

From a best-practices perspective, employers should document all reference check communications. This includes:

• Who was contacted and when
• What questions were asked
• What information was provided
• Any concerns or red flags raised
• How did the information factor into the hiring decision

Keeping a written record helps demonstrate due diligence and transparency, especially if a hiring decision is later challenged. It also ensures consistency in the reference-checking process, which is critical for maintaining fairness and reducing bias.

Refusing to Provide a Reference

In some cases, an employer may prefer not to provide a reference at all. This is entirely lawful, provided the decision is applied consistently and not based on discriminatory motives.

Some organizations adopt a policy of only confirming dates of employment and job title to avoid the legal risks associated with providing performance-based commentary. While this “name-rank-and-serial-number” approach may frustrate prospective employers, it is legally defensible and commonly used in larger organizations or unionized environments.

However, employers must be careful not to selectively refuse references for certain individuals (e.g., those who filed complaints or took parental leave), as this could be seen as reprisal or a form of discrimination.

Reference Checks for Unionized Employees

Collective agreements may contain specific provisions about reference letters or the use of personnel records in unionized settings. Employers should consult the agreement and possibly union representatives before providing a reference for a current or former unionized employee. Unauthorized disclosures may breach the agreement or trigger a grievance.

Takeaways for Ontario Employers

Reference checks remain a useful and often necessary tool in the hiring process, but they must be conducted within the boundaries of privacy and human rights law. To mitigate risk and ensure fairness:

• Always obtain explicit consent from the applicant before contacting any references.
• Limit your questions to job-related performance and avoid areas protected under the Human Rights Code.
• Document all communications and decisions arising from the reference check process.
• Provide training to managers and HR staff on privacy obligations and anti-discrimination principles.
• Consider implementing a formal reference check policy to ensure consistency and legal compliance.

Employers should also review their practices regularly to ensure they align with evolving legal standards and best practices.

Ontario Reference Checks: Navigating Legal Pitfalls for Employers

The legal landscape surrounding reference checks in Ontario is more nuanced than it may appear. What was once an informal phone call between colleagues is now a regulated activity that involves privacy considerations, human rights protections, and potential civil liability. Employers must proceed with caution and clarity when collecting or sharing information about job candidates.

With proper planning, training, and documentation, employers can leverage reference checks as a legitimate hiring tool while minimizing legal exposure. When in doubt, consult employment counsel to ensure that your organization’s practices are practical and compliant with the law.

Toronto Employment Lawyer Guiding Ontario Reference Checks for Employers

The complexities of conducting legal and practical reference checks in Ontario can expose your organization to significant liability. Don’t navigate this intricate landscape alone. Haynes Law Firm collaborates with employers across diverse sectors to develop and implement robust conflict prevention strategies designed to minimize your exposure to legal risks during the hiring process. Our proactive approach identifies and addresses potential areas of concern, ensuring your reference check practices are both effective and compliant. Should a dispute arise, our firm provides exceptional advocacy in court, mediation, and arbitration. To learn how Haynes Law Firm can assist your organization in establishing legally sound hiring practices, please contact us online or call us at 416-593-2731 for a consultation.