Risky Business: A Guide to Providing References  |    Free Termination Policy

Defamation, Negligent Reference Claims
Practical Guidance for Providing References
Follow Policy; Limit Remarks to Verifiable Information

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. Get your FREE access to this and 100's of FREE HR resources today.

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                                   [Download Free Policies]

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

 

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This article is not intended as legal advice. Readers are encouraged to seek appropriate legal or other professional advice.

 
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