[argonaut]

IANAL, but the correct question to ask (the opposite of your question), is: Is that illegal? And I'm pretty darn sure it is not illegal. Why would the even be illegal? You can reference check as much as you want.

Be careful not to conflate social custom (it is customary that a company not reference check you with the company you work at) with law.

EDIT (reply to below): which has nothing to do with law. Parent claimed it was illegal, however. Not to mention the fact that it is perfectly ethical to make an offer conditional on letting you talk to their employer. What would be unethical is if you talked to their employer without asking them.

[yaur]

If you have a general policy where you have to talk to their direct manager or where you always have to talk to the CEO then you might be alright. But if you are making a special policy for employees of a certain company you should probably be talking to a lawyer first. This kind of stuff is almost all state law, so there isn't going to be a universal answer.

That aside, in the scenario "Fred" is good friends with one of your top engineers in the scenario presented. If you ask "Cathy" and she says yes everything is golden, if she says no and Fred gets canned or Cathy's company goes under one of your top employee's good friends is now unemployed because you put your personal relationships ahead of the buisness. This is not a good situation to be in.

Also from the article: "It is important to note that just about all of these kinds of policies violate the Right to Work laws in California"

[wavefunction]

I would prefer to ask (a question you don't ask), is: Is that ethical? And I'm pretty darn sure it is not ethical.

[sokoloff]

I will tell you that I use all reasonably (and legally) available information in evaluating a prospective senior hire. That includes looking through my network for anyone who may have overlapped and getting their take on the candidate.

I will sometimes make an exception to that policy (hurting myself and my company) to not ask a current employer in cases where I probably wouldn't weigh that input very highly anyway.

I sure wouldn't expect that if you're applying to a company for an important position that they will entirely confine themselves to your list of references. Why on Earth would they? I'm going to check my network, your public Google/github/twitter/FB presence, etc.

To me, it's not about doing a reference check with my friend the CEO of the other company to whitewash unethical colluding behavior nor to threaten a candidate, but rather because doing reference checks with people who know the candidate well is good business.

I should perhaps provide the following color to the above: I will also aggressively recruit from a friend's company, and I've been on the other side, with startups/spin-outs aggressively recruiting top talent from within my organization. I never took it personally, and am happy to see the success that allows them to hire great employees, and happy to see employees go on to a job they prefer. My job is to make my own company a great place to work and retain top employees that way, not try to cultivate some quid-pro-quo social obligation to prevent the prison warden next door from hiring my prisoners.