Employment References and
Your risk in providing employment references to prospective employers is that
former employees may sue you if your references are unfavorable and lead to job
rejections. The claim that former employees are most
likely to assert is that the references are false and damaging to their
reputations and, therefore, defamatory.
An employer may be liable to a former employee for defamation if the employer
communicates to a prospective employer or other person a false statement that
results in damage to the former employee's reputation. Defamation is commonly
referred to as "slander" if the communication is verbal and as
"libel" if the communication is written.
Awards in successful defamation suits may include damages for lost earnings,
mental anguish, or pain and suffering and, if the employer's conduct was
sufficiently egregious, punitive damages.
A successful defamation claim requires more than merely showing that an
employer provided an unfavorable employment reference. Because employment
references play an important role in hiring decisions, the law usually protects
an employer who in good faith discloses information that the employer believes
is true to a prospective employer or other person who has a legitimate interest
in receiving the information. This protection may be lost, however, if the
information is not limited in scope to the inquiry being made, is disclosed at
an improper time, or is disclosed in an improper manner. For further details,
against defamatory statements.
The following are examples of the types of statements that you should avoid
making in giving employment references:
- Accusations. Accusations that an employee engaged in illegal or
improper conduct frequently form the basis for defamation lawsuits.
Employers have been liable for defamation for making statements to the
effect that a former employee was a thief, used illegal drugs, or made
"improper" advances to women. If you fired an employee because you
suspected that the employee engaged in illegal or improper conduct and you
feel compelled to state the reason for the firing, then restrict the
statement to your suspicion ("Employee was fired because he was
suspected of taking company property," not "Employee was fired
because he stole company property"). However, don't even state a
suspicion unless you can support it with objective evidence.
- Exaggerations. Employers can also get into trouble by exaggerating
an employee's misconduct. For example, a statement that employees were fired
for "gross insubordination" was defamatory when the employees'
only alleged misconduct was their refusal to adjust their expense accounts.
- Statements not made in good faith. The general protection extended
to employers giving employment references requires that the statements be
made in good faith. An employer's statements are not made in good faith if
the employer knows they are untrue or if the employer makes no effort to
determine if they are untrue. For example, an employer who lied in stating
that an employee had admitted falsifying expense records was liable for
defamation. Similarly liable was an employer whose manager made negative
statements about an employee's work performance solely on the basis of
rumors. The manager had never supervised, worked with, or evaluated the
employee and misrepresented to the prospective employer that he had actually
worked with the employee.
- Statements made to improper parties. The general protection
extended to employers giving employment references also requires that the
statements be made only to persons having a legitimate business interest in
the information disclosed. For example, you can probably tell an inquiring
employer that an employee was fired because the employee was suspected of
stealing business property, provided there are objective facts to support
your suspicion. In contrast, expressing your suspicion to others, such as
other employees or friends who have no real reasons for knowing the specific
details why the employee was fired, may be defamatory.