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HR professionals daily meet the challenge of telling the truth and
accepting the consequences. Providing references for former
employees is only one example of the challenge. This article, the first of two parts, discusses the employer’s liability for providing
references and suggests ways to minimize the risk.
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When asked to provide a reference
for a former employee, many HR professionals confine their remarks
to the employee’s name, position, and dates of employment. While
this approach may limit the employer’s liability for defamation
claims, it does not help former employees get new jobs or help
prospective employers evaluate candidates. In addition, it could
even expose an employer to claims of giving negligent references if
the employer conceals negative information about an employee. In
recognition of these problems, an increasing number of HR
professionals give prospective employers specific information about
former employees’ work habits, attendance, and performance. This
article provides practical guidance for responding to reference
requests and for managing the risk of defamation or negligent claims
in the process.
Defamation, Negligent Reference Claims Concern Employers
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If an
employer is not careful when it gives a reference, it may be liable
for defamation or providing negligent references. Although these
claims are typically difficult to win, fear of them causes many
employers to set reference policies that are impractical and
unhelpful to both employees and their prospective employers.
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Defamation is defined as the act of harming another’s reputation by
libel (in writing) or slander (verbally). For example, an employer
may be liable for defamatory post-employment references if a company
official calls a former worker "untrustworthy, a liar, and a
slacker." Because of the potential liability for unguarded remarks,
many organizations limit reference information to verifying the
former employee’s position and dates of employment. However, this
policy is difficult to enforce since some supervisors ignore it and
divulge more information, typically because they want prospective
employers to be aware of an applicant’s employment history. This
departure from established policy exposes the employer to defamation
claims. In addition, individuals making the comments can be
personally liable for defamatory remarks.
Employers can defend themselves from these claims in several ways.
First, truth is the best defense against any defamation claim. In
addition, employers can use "qualified privilege" as a defense. A
"qualified privilege" defense recognizes that post-employment
references are not defamatory unless the employer discloses
information it knows is false or makes the disclosure regardless of
the employee’s rights. Alternatively, "good faith reference" laws in
about half the states (including California, Florida, and Illinois)
protect employers who give truthful references. These laws vary, but
generally, the employer is not liable if the reference was given in
good faith and without malice. However, the laws typically impose
certain restrictions on the references in order for the protections
to apply, such as requiring that the reference request and response
be in writing. Further, employers should note that "good faith
reference" laws are only a defense and cannot prevent a lawsuit.
Therefore, these laws are not a substitute for following the
employer’s policy and procedural safeguards, such as requiring a
signed consent form prior to providing references. (See
"Practical Guidance," below.)
If an
employer gives too little information or "glosses over" problem
areas, it may trigger a different risk by providing a negligent
reference. Under this theory, which is a fairly new trend, former
employers can be liable for inaccurate or untrue references. Most
successful negligent reference claims have involved subsequent
employers that place the employee in a position where others can be
harmed easily, such as in a nursing home, daycare, or school. For
example, in a recent California case, Randi W. v. Muroc Joint
Unified School Dist., 929 P.2d 582 (Cal. Sup. Ct. 1997), an
employer was held liable when a former employee sexually assaulted a
student because it unqualifiedly recommended the employee for a
position in a school district even though it knew of the employee’s
past sexual improprieties. Although the law in this area is still
evolving, employers may be able to prevent claims of negligent
references by providing truthful, detailed responses to questions
from prospective employers. For example, if a nursing home employer
terminates an employee for harming a patient and that fact has been
accurately documented in the employee’s personnel file, that
information should be disclosed to prospective employers if the
employee would be in a position to repeat the harmful behavior.
However, if the employer is not sure about a former employee’s
involvement in an injurious act, it should only confirm that it
would not rehire the employee to prevent claims of defamation.
Practical
Guidance for Providing References
In light
of these potential claims, how can employers both provide accurate
references and minimize their liabilities? The Editors asked
Personnel Policy Service’s Legal Editor Edward C. Jepson, Jr., for
his advice. Jepson, an attorney in the labor and employment law
department of Chicago-based law firm Vedder, Price, Kaufman &
Kammholz, suggests the following tips for responding to reference
requests:
•
Establish and follow a policy on giving references. Share your
organization’s policy on past-employment references with all
employees. Train supervisors to send all reference requests to the
human resources department and discuss the consequences of giving
out references individually. Remind them that violating the
employer’s reference-giving policy can expose both the individual
and the employer to liability for defamation charges. If references
from employees outside the HR department are needed (such as for an
upper level executive), the HR department should guide the process
by ensuring that the former employee signed consent forms and that
the reference information provided is accurate and objective.
•
Obtain the employee’s written consent to give references to all
prospective employers. A general consent for post-employment
references (for example, acquired at an exit interview) should
satisfy this requirement. As an alternative, some employers prefer
to get a separate consent for each prospective employer to ensure
that the employee has granted permission to release information to
that particular employer.
• Use
standard form letters of recommendation for all employees terminated
by layoffs or reductions-in-force. For each employee, state the
business-related reason for the layoff or reduction-in-force and
note that this does not reflect the employee’s job performance. The
letter should indicate that all affected employees were given the
form letter and that the employer will release further information
with the employee’s express, written consent. Once the employee has
given consent, any specific job performance information should be
communicated directly to the prospective employer.
•
When contacted with a reference request, take the requester’s name,
company, and phone number and call back to verify the legitimacy of
the request. This additional safeguard helps ensure that you
share information only with the proper representatives of employers
with a legitimate need for the reference.
•
Review the employee’s personnel file before answering the reference
request. All remarks made to the prospective employer should be
supported by the records in the employee’s file. Limit remarks to
truthful, objective, and well-documented information in the file.
•
Answer only the questions the prospective employer asks. Do not
volunteer information.
•
After giving verbal references, document the questions and your
responses. Make sure that you have adequate records of the
reference conversation in case you have to recreate it at a later
date. If you respond in writing, retain a copy for your files.
Employers also should be honest with employees and state the real
reason for an involuntary termination so that later references will
not be a surprise. For example, employers should not disguise a
termination for performance problems as a layoff or a
reduction-in-force. Service letter requirements in some states
require the employer to tell the employee the truthful reason for
the termination or separation. These states include Arizona,
California, Nebraska, Minnesota, Missouri, Montana, and Texas.
Follow Policy; Limit Remarks to Verifiable Information
Responding to reference requests can be either straightforward or
troublesome for employers. Organizations should balance the
potential liability against a broader concern for providing accurate
references in hopes that other employers will reciprocate. Employers
should establish their policy, designate personnel to give
references, and confine remarks to objective, truthful information.
These steps may reduce the risk of both defamation and negligent
reference claims, help good employees obtain new positions, and
prevent bad employees from wreaking havoc on unsuspecting
organizations.
Risky Business: Part Two - A Primer on Reference Checking |
Personnel
Policy Service, Inc.
