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You can find ways around this if you're an employer. There's always word of mouth and non-official ways of asking. All it takes to get you is someone seeing your application who worked with you or knows about you or just doesn't like you - and they will mention to the boss what they know about you.
There are also code words and reading between the lines. And if a former supervisor will only transfer the call to HR, it can look bad but they might just be carefully following the rules.
There are a few states where it is actually illegal to say more than dates, salary, and title. I think Michigan is one of them? Beyond those few states, you are right, it's not illegal but they open themselves up to liability if they reveal something that is perceived to be untrue. Even if it isn't untrue, there's the possibility of a lawsuit, so most just don't say a thing.
And yes, there's always back channels that employers can use. Most industries are really fairly small and incestuous so employers often have sources they can rely on to provide unofficial information. Someone they used to work with that worked with you, someone they went to school with, someone they know who knows someone who worked with you......And its pretty rare that you will ever find out who they talked to about you or what that person said.
The most common now days is would you reire the ex-emplyeee with no comment. Hard to fught in court.
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