What to Do if a Potential Tenant Fails Employment Verification

Finding great tenants isn’t always easy, but it’s worth the effort. The fallout from leasing to bad tenants is widespread—from missed rent to property damage and evictions—which is why tenant screening is vital to only accepting stellar tenants while avoiding bad ones. 

You’re looking for someone with good credit, positive references, and a stable income that will pay the rent. Steady employment with good wages is one of the strongest indicators of reliable income, so verifying employment is a must when screening tenants. 

But some applicants may fail employment verification for a few reasons, so don’t count the tenant out just yet. Alternative proof of employment and other signs of financial health can help you make an informed decision. 

We’re reviewing what can lead to failed employment verification and how to handle next steps professionally and legally. 

Quick Insights

• Employment verification can serve as proof of income, a critical part of effective tenant screening.
• Employment verification can fail for a few reasons, including unresponsive employers, self-employed renters, or insufficient income.
• Failed employment verification shouldn’t automatically lead to rejection. Check the accuracy of your process before pursuing alternative verification through documents like pay stubs and bank statements.
• Look at all rental applications holistically, including employment, credit history, background checks, overall savings, and landlord references.
• If you need to tell an applicant they failed employment verification, be professional while offering other proof of income options. Always keep copies of all communications and documents in case of disputes.
• You can future-proof employment verification with process improvements and technology enhancements. 

What Does it Mean to Fail Employment Verification?

Failing employment verification usually means one of two things—either you can’t confirm that the tenant has a job or you can’t confirm that their pay meets your rent-to-income ratio requirements. 

Beyond that, common reasons applicants may fail employment verification include:

The employer couldn’t confirm employment. In this case, the employer responded but couldn’t validate the applicant’s job, title, or wages.  

The applicant provided false or misleading information. An applicant may accidentally give an incorrect title or salary, leading to a mismatch between the application and their employer’s answers to your verification questions.

The applicant didn’t meet rent-to-income ratio requirements. Even if an applicant has verifiable employment, it’s possible they won’t be able to afford rent.

The tenant’s self-employed or has an unconventional income without proper documentation. Some applicants may be freelance or gig workers without consistent paychecks, making income verification more challenging.

The employer is unresponsive or unwilling to verify employment. Unless the request comes from a federal or state agency, employers don’t have a legal obligation to verify employment. Plus, internal policies and HR backlogs can lead to delays.

Failed employment verification may not disqualify a tenant immediately. In many situations, asking for clarification or additional documentation can resolve the issue. In other cases, a comprehensive review of the tenant’s application and financial stability may outweigh an income shortfall. 

Pro tip: Always receive written permission from the applicant before contacting an employer. Handle all personal data, including salary, carefully to comply with data security regulations. 

Verify the Accuracy of the Employment Verification Process 

If employment verification fails, don’t notify the applicant right away. Take these three steps first before jumping to any conclusions. 

Double-Check the Information Provided by the Tenant 

Like any process, employment verification isn’t foolproof, and honest mistakes happen. For example, your applicant may have accidentally given out-of-date contact information. 

If you haven’t been able to get in touch with a potential tenant’s employer, ask the applicant to confirm that you have the correct organization name, contact person, phone number, and email address. 

You’ll also want to double-check that the tenant gave you their correct title and department. Large organizations may have multiple offices and divisions with little interaction between them. An inaccurate title or department might mean you’re contacting someone who’s never heard of your applicant, even if they work at the same company. 

Reach Out to the Employer Again (If Necessary)

Even with the right employer information, you may have to contact the applicant’s employer more than once. Even in the best circumstances, employment verification might take a while for valid reasons, like: 

• The organization has a busy season, like accounting firms in April.
• The employer has strict policies for handling employment verification requests.
• A backlog of employment verification requests has built up during the summer peak apartment turnover season. 

Cross-Check with Alternative Sources

Applicants can (and should) provide multiple sources for income verification, including pay stubs, tax returns, and bank statements. Multiple pieces of evidence can demonstrate employment even if the employer is unresponsive. 

Request reliable documents, like bank statements, W-2 forms, and pay stubs. Use these documents to confirm employment by: 

• Looking for regular deposits from the employer on bank statements

• Comparing employer data and salary on a W-2 form against the application
• Matching pay stub amounts to bank deposits

Tax returns can also demonstrate income over time and report other earnings from gig work or contracting. An applicant’s wages from their day job may not satisfy rent-to-income ratio minimums, but their overall household income might. 

Consider Accepting Alternative Forms of Income Verification

If an employer won’t verify employment, there are still other ways you can confirm an applicant’s income. Alternative sources may give you the proof of income you need. Consider requesting documents, like: 

Pay stubs from the last three months. If you have concerns about employment stability, consider asking for more than three months. 

Bank statements from the past two to three months. Cross-reference pay stub amounts against bank statement deposits. Look for consistent amounts from the same employer.

For self-employed applicants, consider asking for six months of statements and look for regular deposits from multiple clients, indicating a varied and resilient income stream.

Tax returns. Last year’s 1040 can provide a more complete picture of an applicant’s household income and deductions. For self-employed applicants, ask for at least the last two years and look closely at Schedule C for income and expenses.

Other sources of stable income. Pension statements, social security, and disability payments can substitute for pay stubs if the applicant is on a fixed income.  

But be cautious. According to a 2025 session at the National Apartment Association’s annual conference, Apartmentalize, the industry has seen a 40% increase in fraudulent applications over the past year.

At least 6% of all applications contain some form of falsified information. While that percentage might seem small, the cost of just one bad lease can be as high as $100,000. 

With these risks in mind, review each document thoroughly for signs that your applicant may be faking their proof of income. Consider using document fraud detection software to speed up the review process and increase accuracy. 

Pro tip: Skip the back-and-forth of employment verification requests with connected payroll software that automates verification requests. You’ll receive confirmation more quickly and with fewer fraud risks. 

Assess the Risk of Approving a Tenant Who Failed Verification

Employment is just one part of tenant screening—if an applicant fails employment verification, consider their application as a whole before making any decision. 

If the applicant failed employment verification because of low income, you can gauge the risk level by asking a few questions:

• Does the applicant’s income cover rent and living expenses? If they just missed your income cutoff, the tenant may still be able to afford rent.
• Have they provided a legitimate reason for the discrepancy? Often, a few questions can clear up confusion about salary and pay. Check in with the applicant for an explanation. 

Keep in mind that employment verification only reflects the here and now—someone with a job today could lose it tomorrow. So, take a holistic view of a tenant’s reliability by reviewing all of their application: 

Renter references. Do previous landlords say positive things about the applicant? Do they have a history of evictions or unpaid rent?

Credit score and history. Does the applicant have a strong credit score? Do they have previous bankruptcies or delinquencies on their credit report? Do they have a high debt-to-income ratio that might affect their ability to pay rent?

Savings. Does the applicant have robust savings? If they lose their job, do they have enough money in the bank to still cover rent?

Employment history and references. Does the applicant have gaps in their job history? Do previous employers speak well of the applicant?

Background check. Does the tenant have a criminal history, particularly around violent crime or theft?

Potential co-signor or guarantor. Could someone co-sign the lease or act as a guarantor to make up for an income gap? 

Remember, the purpose of employment verification is to help you determine if a future resident will be able to afford their rent. A tenant with a high salary and a lot of debt may still miss rent payments. On the flip side, a tenant who just misses your income cutoff may turn out to be an exemplary renter. 

When to Reject a Tenant Who Fails Employment Verification 

Sometimes, you may have to reject an application that doesn’t pass employment verification. Certain warning signs may tip the scales toward rejection. Don’t ignore these red flags: 

Signs of fraud or deception. Fake pay stubs, altered bank statements, or false employer references could point to an employment verification scam. 

Severe income shortfalls. Unfortunately, sometimes an applicant simply can’t afford the rent and doesn’t have a way to make up for the gap.

No proof of income. Even if employment verification fails, an applicant should still be able to demonstrate sufficient income to afford rent. If they can’t, it’s a red flag.

Pattern of financial instability. Watch out for signs of financial distress, like a low credit score, history of job losses, bankruptcies, or a high debt-to-income ratio.

Before rejecting an application, ensure that your reason aligns with fair housing laws to avoid any claims of discrimination. All decisions should rely on objective, consistent criteria. Keep detailed records of each tenant screen, including all communications. 

How to Inform a Tenant that They Didn’t Pass Employment Verification

Telling a prospective tenant that they didn’t pass employment verification may feel daunting—the applicant may disagree, feel embarrassed, or confront you. Use these few tips to approach the situation calmly and professionally with minimal drama. 

Be Professional and Clear

First things first, inform the applicant in writing. Keep a copy of the notice for your records—it might come in handy if any legal disputes arise later on. 

In the notice, focus on the facts. Steer clear of any personal judgments or assessments, and outline the documentation and information you reviewed and the verification results.

For example, you might note that you received a pay stub and employment verification letter, but you couldn’t get in touch with their employer to authenticate them.

Offer Alternative Options if Applicable

Ask the applicant if they have other income streams and to provide supporting documentation, such as payments from gig work or side hustles. If needed, request more documentation to support income verification. 

Depending on your rental policies, you might suggest modifications to the lease agreement, like: 

• Adding a cosigner or guarantor. Encourage the applicant to reapply with someone whose income meets your requirements.
• Asking for a higher security deposit. Keep in mind that many jurisdictions have limits on how much security deposit you can collect. 

Maintain Proper Documentation in Case of Disputes

Save a copy of the written notice you give the applicant, as well as all communication and documents. Remember to store all of this data securely to comply with data privacy regulations, like GDPR, and consumer protection laws, like the Fair Credit Reporting Act.

Preventing Future Employment Verification Issues

Although it’s impossible to avoid every employment verification pitfall, a few adjustments to your tenant screening process can help avoid hassle and keep you on the right side of the law: 

• Require employer contact details on the application and request written permission to contact their employer.
• Use income verification software like Connected Payroll Verification to deter fraud.
• Standardize income requirements and use them consistently.
• Clearly document and share verification policies in rental applications to avoid any misunderstandings. 

How to Do Employment Verification Right

Handling failed employment verification can take time and effort, but a few key steps can help you move forward with efficiency and accuracy. Start by double-checking employer information, contacting the organization again, and reviewing alternative documentation. 

Look at an applicant’s overall financial health and stability before making a final decision. Other factors, like guarantors, stellar credit, healthy savings, and strong references, may overcome concerns over minor income shortfalls. 

Because rental applications are subject to fair housing laws, write down and follow consistent, objective screening policies. Train all team members on these procedures, and ensure that all decisions have supporting documentation. 

If you’re concerned that a potential rejection could lead to a legal dispute or discrimination accusation, consider consulting a legal professional, who may also suggest improvements to your current policies. 

And stay cautious—rental application fraud isn’t going anywhere, so consider creating a multi-layer fraud detection strategy to protect your business. Ready to get started? Check out our Essential Buyer’s Guide for Fraud Detection.