How do I use reference images in Sass when using Rails 3.1?

The following should do the trick:

.button.checkable { background-image: url(image_path('tick.png')); }

Rails in fact provides a bunch of helpers to reference the assets:

image-url('asset_name')
audio-path('asset_name')

In general

[asset_type]-url('asset_name') #Becomes url('assets/asset_name')
[asset_type]-path('asset_name') #Becomes 'assets/asset_name'

asset_type may be one of the following: image, font, video, audio, javascript, stylesheet