How to Verify a Tenant’s Employment Without Violating Privacy Laws

How to Verify a Tenant’s Employment Without Violating Privacy Laws 

Landlords need to verify an applicant’s income to ensure the applicant is able to pay rent. However, employment verification involves handling sensitive personal information that can lead to privacy issues and legal implications for property owners. 

Before verifying an applicant’s income, landlords need to be familiar with applicable laws and know what information they can request from an employer. Read this guide for best practices on how to verify a tenant’s employment and tips to ensure your screening is legally compliant and effective.

Ready to send a screening request? All you need is an applicant’s name and email address to send an online rental application or use our comprehensive tenant screening services. 

Quick Answer: How to Verify a Tenant’s Employment Legally 

The most important things landlords should do when verifying employment are: getting consent, limiting verifications to business-related questions, and following the same procedures with all applicants. 

Here are some best practices for ensuring your procedures for verifying tenant employment are legally compliant: 

• Get written consent from the applicant. Before contacting an applicant’s employer, have the applicant sign a tenant verification consent form that explicitly allows you to contact the applicant’s current or previous employer. 
• Have a clear process for verifying employment and make sure you follow it with all applicants to avoid fair housing law violations. 
• Keep your questions focused on business-related concerns that are relevant to the rental application and tenancy. 
• Document your process. Keep records of the date and time of calls, who you talked to, any information you obtained, and any notes you took during the conversation. 
• Get supplemental documentation when needed. If you’re unable to get the verification you need, you can request additional documentation from the applicant, including pay stubs, W-2 forms, an offer letter, tax returns, or bank statements. 

How to Contact a Tenant Applicant’s Employer for Verification 

Here is a step-by-step guide to walk landlords through the rental employment verification process: 

1. Get written authorization from the applicant. Make this easy by using a Rental Application that includes authorizations for screening reports, contacting prior landlords, and contacting current or prior employers. 
2. Verify the employer’s information. Rather than simply calling a phone number, look at the employer’s website to verify the contact information. A good practice is calling the main number and asking for human resources. 
3. State your name, position, and purpose of your call. For example, “This is [name]. I am a landlord and have received a rental application from [applicant’s name]. I am calling for an employment verification and have written authorization from [applicant’s name] to verify their employment.”
4. Only ask relevant questions. For example: 
   1. Do you currently employ the applicant? 
   2. What is the applicant’s job title?
   3. When was the applicant hired? 
   4. Is the applicant a full-time, part-time, or seasonal employee? 
   5. Do you expect the applicant’s employment to continue?
5. Don’t ask questions that could raise fair housing concerns. Avoid questions about medical conditions, familial status, disabilities, disciplinary history, or any protected characteristics.
6. Document the call. Keep a clear call record for each call, including: 
   1. The date and time of the call
   2. The name and title of the person you talked with 
   3. The information that was verified 
   4. Any information the employer would not verify 

What Employers May Share During Tenant Employment Verification 

There are no federal laws limiting the information employers can share. However, internal policies and state laws often limit the information that an employer will verify. 

As a general rule, an employer will share employment status, including employment dates, job title, and whether the employee is full-time, part-time, seasonal, or contract. Some employers will also share income information and whether or not employment is expected to continue. 

Employers usually will NOT share performance evaluations, disciplinary actions, attendance data, or information about medical leaves. If an employee is no longer employed, the employer will likely not share the reason the employee left. 

What if an Employer Refuses to Verify Income

Many employers will not share income information. In those situations, landlords should get all information they can from the employer and then request supporting documentation to verify the applicant’s income. This includes pay applicant pay stub verification, W-2 forms, tax returns, bank statements, and offer letters. 

Privacy and Screening Laws Landlords Should Know 

Throughout the screening process, landlords need to be familiar with applicable privacy laws, including: 

• Fair Credit Reporting Act: This applies whenever a landlord gets reports from a consumer reporting agency. 
• Relevant state privacy laws, which can impact collecting, securing, using, and disposing of personal information. For example, the California Consumer Privacy Act (CCPA). 
• Fair Housing Act: While not a privacy law, it impacts the information landlords can collect and consider when screening applicants. 
• Americans With Disabilities Act: A relevant law that prevents landlords from evaluating applicants based on disabilities, medical conditions, workers’ compensation, or medical leave. 
• Financial privacy laws: Landlords can reduce the risk of violating financial privacy laws by only requesting information needed for business purposes, storing the information securely, and limiting employee access to personal information. 

What the FCRA Requires When Landlords Use Tenant Screening Reports 

When landlords verify income using a third-party consumer reporting agency, the Fair Credit Reporting Act (FCRA) is applicable. Landlords must comply with FCRA anytime a landlord gets a consumer report for an applicant – for example, an income verification report or credit report. When a landlord calls an employer to verify income, the FCRA is not applicable. 

When the FCRA applies, landlords must: 

1. Obtain the applicant’s written authorization before running the report. 
2. Provide the applicant with an adverse action notice if an adverse action is taken. 
3. Only use information for the business purpose of evaluating the tenant. 
4. Securely dispose of personal information when it is no longer necessary. 

Frequently Asked Questions About How to Verify a Tenant’s Employment 

Do I need an applicant’s permission to verify employment? 

Yes, you need an applicant’s permission to verify employment. If you’re using a third-party consumer reporting agency, the Fair Credit Reporting Act requires you to get written permission before running reports. In addition, some state laws require written authorization, and many employers will only share information if there is employee authorization. 

What can a landlord ask an applicant’s employer? 

Landlords can ask business-related questions that are relevant to an applicant’s ability to pay rent. Landlords may not ask questions about protected characteristics, including disabilities, familial status, race, disciplinary history, or medical leaves. 

Is tenant employment verification covered by FCRA? 

Employment verification is covered by FCRA if the landlord uses a third-party consumer reporting agency to verify income. If the landlord verifies employment by calling the employer or submitting an Employment Verification Form, FCRA does not apply. 

How do I verify employment for a self-employed applicant? 

With self-employed applicants, landlords focus on verifying the applicant’s income. This is commonly done through tax returns, bank statements, business documentation, accountant documentation letters, or client invoices. 

Can I deny an applicant if their employer won’t verify income? 

While a landlord can usually deny an applicant if the landlord is unable to verify income, it’s a good practice to allow applicants to provide alternative proof of income if the applicant’s employer will not verify income. 

In these situations, contact the employer to verify employment, and then use alternative methods for income verification – including third-party income verification reports, tax returns, and pay stubs. 

Best Practices for How to Verify a Tenant’s Employment 

Landlords need a clear system for tenant employment verification, and landlord employment verification rules should be applied consistently to all applicants. 

Use our free online rental application to make the screening process as easy as possible. Get the authorizations you need to run all screening reports, including employment verification. 

Download a free rental application or send a free online rental application to ensure your screening process is efficient, effective, and legally compliant.