License Verification Best Practices for Employers
Professional license verification is critical for employer compliance. Primary source verification from state licensing boards is the gold standard, yet 40% of organizations still rely on employee self-reporting according to industry surveys. Implementing robust verification processes protects your organization from liability and ensures regulatory compliance.
Why Verification Matters
Compliance Requirements
Many industries mandate license verification:
| Industry | Requirement | Consequence of Non-Compliance |
|---|---|---|
| Healthcare | CMS Conditions of Participation | Loss of Medicare/Medicaid billing |
| Financial Services | State licensing laws | Fines, enforcement actions |
| Legal | Bar association rules | Malpractice exposure |
| Education | State certification requirements | Loss of accreditation |
Risk Mitigation
Proper verification prevents:
- Hiring unlicensed practitioners
- Liability from unqualified employees
- Regulatory penalties
- Reputational damage
- Malpractice claims
Verification Methods
Primary Source Verification (PSV)
Definition: Verification directly from the issuing authority
Sources include:
- State licensing board websites
- Board verification letters
- National licensing databases (NPDB, NMLS)
- Direct board confirmation
Advantages:
- Highest accuracy
- Defensible in audits
- Captures real-time status
- Identifies disciplinary actions
Secondary Verification
Definition: Verification through intermediary sources
Sources include:
- Employee-provided documents
- Third-party verification services
- Credential verification organizations (CVOs)
- Background check companies
Limitations:
- May not reflect current status
- Documents can be falsified
- Less defensible in audits
- May miss disciplinary actions
Building a Verification Process
Pre-Employment Verification
Before hire, verify:
- License is valid and current
- License type matches position requirements
- No disciplinary actions or restrictions
- License covers required practice scope
Process steps:
- Collect license information from candidate
- Verify through primary source
- Document verification and date
- Flag any discrepancies
- Make conditional offer pending verification
Ongoing Monitoring
Post-hire verification schedule:
- Initial: Before start date
- Annual: At license renewal
- Triggered: When concerns arise
- Continuous: If using monitoring services
What to monitor:
- License expiration dates
- Disciplinary actions
- Status changes
- Scope limitations
Technology Solutions
Verification Databases
Major verification resources:
| Database | Coverage | Best For |
|---|---|---|
| NPDB | Healthcare practitioners | Healthcare employers |
| NMLS | Mortgage professionals | Financial services |
| State board websites | State-licensed professionals | Direct verification |
| Nursys | Nursing licenses | Healthcare employers |
| FSMB | Physicians | Medical facilities |
Automation Options
Continuous monitoring services:
- Real-time license status alerts
- Automated expiration reminders
- Disciplinary action notifications
- Compliance reporting
Verification platforms:
- Batch verification processing
- Multi-state capabilities
- Audit trail generation
- Integration with HR systems
API Integration
Modern verification through APIs:
- Direct connection to state databases
- Real-time status checks
- Automated reporting
- Reduced manual effort
State-by-State Considerations
Variations to Navigate
Each state may have:
- Different verification processes
- Varying database accessibility
- Unique license types
- Different renewal cycles
- Varying public information policies
Multi-State Challenges
For organizations in multiple states:
- Maintain state-specific procedures
- Track varying renewal dates
- Understand reciprocity implications
- Monitor multiple databases
Documentation Requirements
What to Document
For each verification:
- Date of verification
- Method used (primary/secondary source)
- Verifier name
- Results obtained
- License number and expiration
- Any restrictions or conditions
Retention Periods
| Document Type | Retention Period |
|---|---|
| Initial verification | Duration of employment + 7 years |
| Ongoing verifications | 3-7 years |
| Disciplinary findings | Permanent |
| Audit responses | Per regulatory requirement |
Audit Readiness
Maintain audit-ready files with:
- Clear verification trails
- Dated documentation
- Source identification
- Action taken on findings
Common Challenges
Challenge: Verification Delays
Problem: State boards slow to respond Solutions:
- Start verification early
- Use electronic verification where available
- Build buffer into hiring timeline
- Consider conditional start dates
Challenge: Multi-State Employees
Problem: Employees working across state lines Solutions:
- Verify all required state licenses
- Track compact membership status
- Monitor state-specific requirements
- Maintain state-by-state documentation
Challenge: License Lapse Between Jobs
Problem: Candidates with lapsed licenses Solutions:
- Require current license before start
- Verify reinstatement if previously lapsed
- Document any gaps
- Assess pattern of lapses
Challenge: Name Changes
Problem: License under different name Solutions:
- Collect previous names
- Request license history
- Verify through license number
- Document name verification
Special Situations
Travel and Contract Workers
Higher verification standards needed:
- More frequent verification
- Multi-facility compliance
- Compact license verification
- Portable documentation
International Credentials
Additional complexity:
- Verify credential evaluation
- Confirm US licensure status
- Check visa work authorization
- Document evaluation sources
Conditional Licenses
Extra scrutiny required:
- Understand conditions
- Monitor compliance with conditions
- Document awareness
- Assess fit for role
Vendor Selection
What to Look For
When choosing verification vendors:
- Coverage of your profession types
- Primary source verification capability
- State database access
- Compliance reporting features
- Integration capabilities
- Turnaround time
- Cost structure
Questions to Ask
- What percentage of verifications are primary source?
- How do you handle states without electronic access?
- What is your average turnaround time?
- How do you alert clients to disciplinary actions?
- What compliance reports are available?
Building Internal Capacity
Staff Training
Verification staff should understand:
- Primary vs. secondary verification
- State-specific procedures
- Documentation requirements
- Red flag identification
- Escalation procedures
Process Documentation
Create written procedures for:
- Each profession type
- Each state of operation
- Exception handling
- Audit response
Key Takeaways
- Primary source verification is the gold standard
- Document all verifications thoroughly
- Automate where possible for efficiency
- Monitor continuously, not just at hire
- Prepare for state-by-state variations
Explore our licensing data resources to support your verification processes.