What is Employment Verification?

You want trustworthy renters—the ones who pay rent on time, maintain the property, and fulfill their rental agreement. But as tenant fraud skyrockets, it’s becoming exponentially more challenging for property managers to identify genuine and dependable tenants. 

Most tenant applications look good on paper. But thorough tenant screening processes are essential to verify all information is legitimate—it’ll help you weed out fraudulent applicants.

Prospective tenants have become more savvy, commonly using fake employment documents to commit applicant fraud. A robust screening process isn’t just helpful—it’s crucial to safeguarding your business and combating rental application fraud.

A National Multifamily Housing Council (NMHC) survey of multi-family property managers, owners, and developers found that over 84.3% have seen applicants falsifying or fabricating pay stubs, employment references, or other income documentation.

That’s where employment verification comes in—helping reduce fraud risks by confirming applicants have a reliable income from a legitimate job (so you know tenants have the financial means to pay rent).

Curious how it works? We’re breaking down everything you need to know about employment verification, including what it is, methods for verification, and best practices to strengthen your tenant screening process.

What is Employment Verification?

Employment verification confirms a prospective tenant’s employment status, salary, and income. It’s a crucial step in tenant screening because it ensures you only accept new tenants who can afford rent, deposits, and other expenses.

Think of employment verification as a tenant’s proof of income. You gather their financial information—like pay stubs, tax returns, and bank statements—and confirm they’re legitimate.

Gathering proof of income during the application process can:

• Reduce risks of renting to individuals who can’t afford rent
• Weed out fraudulent applications
• Minimize expensive eviction proceedings
• Ensure legal protection in case of disputes or litigation

Why Employment Verification is Important for Property Managers

Fake or fabricated employment documents pose numerous risks for property managers: an applicant who submits a fraudulent document is 7x more likely to face eviction or accumulate bad debt.

Think about it. If a tenant submits fake pay stubs or altered tax returns, they might not make the income necessary to pay rent on time—or pay at all. And, depending on your jurisdiction, landlord-tenant laws may make it difficult and expensive for you to reclaim unpaid rent or remove a problem resident from the property. 

Even when eviction is possible, the process can be costly—a typical eviction costs $7,685 after totaling unpaid rent, legal fees, and other charges.

One in 8 rental applications contains some form of fraud. Employment verification helps identify legitimate tenants you can trust and reduce the risks of rent defaults, eviction, and legal implications. 

How Employment Verification Works

Now you know what employment verification is—but how does it work? How can you actually collect and verify tenant income? Here’s a step-by-step breakdown of the employment verification process.

1. Request Employment Information from Applicants

Start by building income verification into your tenant application process. Request employer information or income documents for all prospective tenant applications.

Commonly accepted proof of income includes: 

• Payslips
• Tax returns
• Official bank statements
• Employment verification letters

2. Validate Proof of Income

Once you have all the necessary financial documents, manually or automatically confirm the employment information through connected payroll systems or third-party services. 

While manual verification is an option, it can be time-consuming and prone to errors. Automated verification is fast, reliable, and built for scale. We’ll explore the pros and cons later, but both are viable verification methods.

3. Cross-Check Data for Consistency

Any inconsistencies or gaps in a tenant’s income data could signal fraudulent or falsified documents. It can be easy to overlook these details when manually inspecting documents, so it’s best to use a digital income verification tool for accuracy and efficiency. 

Employment verification technology can help streamline this critical process and review applications quickly—so you can fill vacant properties with great tenants and grow your business.

Types of Employment Verification Methods

Not sure how to verify a tenant’s employment history and income? You’ve got a few options, including manual or automated verification or a mix of both.

Manual Verification

One way to confirm tenants work where they say they do and earn a consistent income is to verify the information they provide manually.

The process may differ depending on which types of employment documents they share and how in-depth you’d like to go with your search.

Common forms of manual verification include:

Direct calls to employers to confirm an applicant’s employment status, title, income, and overall reliability

Contacting tenant references to validate the prospective renter’s personal information and learn more about their history and responsibilities

Reviewing past pay stubs, invoices, and tax documents, cross-checking the information for consistency, legitimate income sources, and any red flags

Automated Verification

If you’re looking to streamline your employment verification process, you can use automated income verification tools to review and confirm tenant information quickly. These solutions typically verify income and employment and detect fraud almost instantaneously.

The process is simple. Applicants can easily verify their income by connecting to their payroll provider or uploading income documents through an automated tool like Snappt.

In moments, the tool automatically:

• Confirms the applicant’s income
• Ensures the authenticity of documents with multi-layer fraud detection
• Calculates gross and net income, saving time and reducing manual error

The result? A frictionless application process for future tenants and a seamless, accurate income verification process for you.

Manual vs. Automated Verification

Let’s take a look at how these two verification methods compare. Here’s an overview of their key differences so you can choose the right approach for your business.

Time

Manual employment verification processes can take substantially longer than automated ones. You’re reliant on time variables beyond your control—like the availability of employers and references—which can result in slower processes and missed opportunities. 

But automated employment verification tools provide almost immediate results so you can make faster decisions.

Accuracy

Manual verification is prone to human error—no matter how diligent you are about reviewing information. When checking manually, you can easily overlook crucial details or miss signs of fraudulent documents. 

Automated tools pull data directly from reliable sources and are backed by advanced fraud detection technology, making them less susceptible to errors.

Security

Property managers are bound by specific legal requirements, making maintaining accurate records and securing tenant information paramount. Manual record-keeping means potentially more errors, inconsistencies, and privacy breaches.

Automated verification typically offers built-in security protocols, like encryption and secure data storage, to ensure legal compliance. They also have features that ensure only authorized personnel can access renter data, reducing risks and boosting overall security.

Scalability

As a multi-family property owner, you know just how crucial scalability is for business growth. You need processes and tools that can grow with your business—not those that hold you back from securing new tenants and filling vacancies.

Manual verification processes are hard to scale and become increasingly risky as you do. Automatic verification systems, on the other hand, can handle large volumes of applicants with laser accuracy. 

Signs of Fake Employment Documents

You’re likely to encounter fraudulent employment documents at some point. But if you know which red flags to look out for, you can catch fake documents and protect your business from fraudsters.

Here are common signs of document fraud:

• Inconsistencies in pay rates, dates, or timestamps
• Mismatched formatting or watermarks
• Missing pages
• Altered signatures, misspelled names, or expired birth dates
• Unverifiable employers, companies, and vendors

Some fraudulent practices may be harder to spot than others. Competitive rental markets are making renters feel pressured to fabricate valid documents, inflating their earnings to stand out and win sought-after properties.

Do your due diligence when reviewing documents to minimize risks.

How Employment Verification Services Can Help

You know why employment verification is vital for safeguarding your business. But you might be wondering how to build it into your existing processes without taking up more of your team’s time and resources. 

The answer? Employment verification services. Enlisting the help of a third-party employment verification tool (like Snappt) can be incredibly beneficial for numerous reasons:

• Accurately detect document fraud almost instantly
• Save hours of manually reviewing employment documents
• Process tenants quickly and identify top applicants
• Ensure security and legal compliance
• Minimize costs with affordable monthly or per-applicant charges
• Scale employment verification so you can fill more properties

Third-party employment verification services strengthen your tenant screening process, making them invaluable for time-strapped teams. But let’s explore some best practices for using them effectively so you get the most out of them.

Best Practices for Employment Verification

Before you add employment verification to your tenant screening process, here are a few best practices you should keep in mind:

Combine multiple verification methods to ensure due diligence and enhance accuracy. This might include requesting pay stubs, verifying employment directly with an employer, and using a reputable third-party verification service.

Use employment verification as one piece of a comprehensive screening process, including credit checks, background checks, rental history and references, and ID verification, for a holistic view of each applicant.

Maintain compliance with legal and privacy regulations to protect your business from hefty fines or legal implications.

Follow a consistent process for every applicant. Establish clear internal guidelines for verifying documents so you treat all applicants fairly and reduce potential bias.

Keep thorough records. Record the steps you take and all the information you gather throughout the employment verification process to prepare for any potential future questions or disputes.

Safeguard Your Business with Employment Verification

There’s no escaping renter application fraud. But you can—and should—take action to protect your rental business from risks. If you want to mitigate the risk of fraud, financial harm, or legal implications, adding employment verification into your tenant screening process is a must. 

Getting started may feel intimidating, but with the help of technology, you can effortlessly adopt reliable verification methods without much added time or effort. Consider integrating employment verification services into your screening process for better protection and peace of mind. 

By using a tool like Snappt’s income verification, you can fast-track the process, quickly identify fake documents, and make educated decisions about prospective tenants.

And remember—employment verification works best when it’s part of a larger, comprehensive strategy. Combine verification with credit checks, background checks, references, and ID validation to combat fraudulent applicants and maintain a successful rental business.