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Giving References for Former Employees: Part 1

  • By Steve Meilleur
  •  |
  • Jul 09, 2019
  •  |
  • Topics: References

A Policy of Giving Only Basic Employee References May Lead to Liability

Whenever one of your employees leaves, you will have to decide what to say to other employers who call for a reference. The decision is fairly straight-forward if the employee left on good terms: you and your former employee can come up with a mutually agreeable statement to explain the departure. Or, you can simply tell the whole glowing truth to any prospective employer who calls for a reference. But you face a more difficult task if the employee did not leave under ideal circumstances. Many employers fear defamation or invasion of privacy claims stemming from less-than-positive references, so they implement "no reference" or "limited reference" policies.

A "limited reference" policy generally prohibits supervisors from providing references and only allows HR to confirm the former employees job title, duties, dates of employment and salary. This is a good way to satisfy the requests of former employees for references, while not exposing the employer to liability for defamation.

Importantly, though employers may believe that such policies decrease the employer's risk of getting sued, there are no federal or state laws that prohibit employers from providing truthful, negative references. Further, such policies may actually harm employees who leave on good terms because they preclude the availability of positive references.

Defamation Lawsuits: The Fired Employee's Revenge

If you are not careful in your statements about former employees, you might find yourself facing a defamation lawsuit. To prove defamation, a former employee typically must show that you intentionally damaged his or her reputation by making harmful statements about the employee that you knew to be false.

At first glance, it might seem like only the most spiteful employer would get caught in this trap. But, if you make an unflattering statement that you don't absolutely know to be true, it could happen to you. Let's face it: Most reasons for firing make the employee look bad. And an employer often cannot prove what he or she strongly believes to be true -- that an employee is stealing from the company, is incompetent, or lied about job qualifications, for example. An employer who makes such statements about a former employee could get into trouble. Your best policy is to say as little as possible and stick to facts you can prove.

For a defamatory statement to be actionable, the statement must be capable of defamatory meaning and it must be published to another person without legal justification or excuse. "Publication" means to communicate defamatory information, either verbally or in writing, to an outside party. In the event an employer is sued for defamation, it may be able to defend itself if it can demonstrate the following:

  • The statement made was truthful. Truth is always a defense to a charge of defamation;
  • The person who made the statement merely stated his or her opinion. It is much more difficult to base a defamation claim on a statement of opinion; or
  • The person who made the statement did not knowingly provide false or misleading information. If an employer has a reasonable, good-faith belief that its statements were true, a defamation claim will generally fail

Negligent Reference/Referral – What Is It?

There is a civil action that is quickly emerging which has had a dramatic impact on the hiring and employment reference process. It’s called “negligent referral.” It is, essentially, the failure of a former employer to disclose to a prospective employer information known to be true that causes harm to a third party.

Negligent referral occurs when a person serving as a reference for a candidate for employment intentionally lies about the candidate or intentionally withholds information that s/he knows to be true that causes or may cause injury to a third party.

Here are a couple of extreme, but illustrative examples. Suppose an employee is fired for stealing while working as a security guard by company A. Then suppose the person fired applies for the same type of position with company B. As part of their hiring practices, company B calls the candidate’s previous supervisor at company A and asks why the candidate left the company and receives a reply something like, “Oh, he resigned and left on his own.” Finally, suppose the candidate is hired by company B and proceeds to steals from them, too. Company B could sue company A for negligent referral because the supervisor knew the candidate was fired and lied about it. That’s negligent referral.

Here’s another example: Suppose employee X is fired for engaging in workplace violence which causes serious injury to another employee. Now, suppose X applies for a similar job with another employer down the street. The company down the street calls to check on candidate X’s eligibility for re-hire or why he left the company, and the previous employer does not disclose the fact that X caused serious injury to another employee and X is hired. Now let’s suppose that newly hired employee X once again injures a fellow employee while at work. Not only can the new employer sue the previous employer for failing to disclose information they knew to be true – which caused serious injury to an innocent third party, but also the injured employee can sue in his/her own right for the previous employer’s intentional failure to be honest about the reason for X’s departure.

The point is that, if you’re asked to be a reference for someone, the best strategy is always to give honest answers or state honestly held opinions to any questions about the candidate overall job performance. Why? Because it’s just as dangerous to say a poor employee did a great job as it is to say that a great employee did poorly.

The negligent referral occurs when a reference intentionally lies about the candidate seeking employment. Once again, honesty is the best policy when serving as a reference! The lesson for employers is that it may be just about as dangerous to withhold negative information as it is to lie about the former employee by saying he was a good employee when, in fact, he wasn’t.

SO keep in mind that a blanket policy of only giving out basic employee reference information may lead to liability. There are some situations when you are obligated to disclose negative information about a former employee, and not doing so can lead to a negligent referral problem.

What Can You Say About A Former Employee?

Just the Facts

As discussed above, you can legally state facts in response to a reference request. These facts may include whether your ex-employee failed a company drug test, the results of which were officially documented. In this case, you can legally state that your employee was fired or let go due to testing positive on a company drug test. Other facts may include arriving late every day to work, which may be officially documented through time sheets or punch cards. NOTE that any “facts” you disclose to a prospective employer MUST be properly documented in the employment file.

Job-Related Details

You should only provide information concerning job-related details in a reference. You shouldn't discuss personal details about an employee, which can include references to her race, religion, age or disability status. Also, you should never discuss ethnic origin, marital status, parenting responsibilities or sexual orientation during a reference request. For example, stating that your former employee may have been a better worker if she'd been a Caucasian may be considered illegal discrimination.

Work Performance

As a former employer you can legally discuss truths about your ex-employee's work performance. These truths can be positive or negative, but they must not be personal opinions. For example, you can state that your ex-employee consistently turned in projects late or did not reach quarterly goals, since these actions can be documented, and records can be produced if legal action arises over your statements. On the other hand, if you state that you think your former employee is lazy or incompetent and that's why he turned in projects late, you may be forced to answer for those statements in court.

Note too, that a former employer can legally refuse to give information concerning an employee other than his official title and the dates he was employed. While this is legal, it's generally considered just as bad as giving a negative review, according to reference resource website References-Etc. Also, if you decide to refuse to answer certain questions that are asked during a reference request, you may want to apply this policy to all references you give and not just for one individual. References-Etc states that "there have been cases successfully argued that an employer discriminated against an employee for not applying the same policy to all its employees."

Most HR professionals recommend the following practices, particularly for multistate employers, to avoid legal liability when providing job references:

  • Only one person, usually a trained HR professional, should be permitted to provide job references. This person should make it a point to review the applicable state laws where the employee resides and where the prospective employer is located. Also, care should be taken to ensure that the exact same process is used for each job reference request to avoid any claims of discrimination.
  • All disclosures should be made in writing and only upon written request from the prospective employer and with written permission from the employee.
  • Provide only factual information and avoid giving opinions about the employee's suitability for a new job.
  • Use documented evidence of the employee's job performance as the basis for the information provided to the prospective employer.
  • Have all applicants complete an application form – in addition to or instead of a resume – which includes a release for employers and other entities from which you might request a reference.
  • Require separating employees (whether voluntary or involuntary) to complete a release form that authorizes you to give information to prospective employers.

What To Tell Other Workers

It can be challenging to figure out what to tell the rest of your workforce when an employee leaves on less-than-positive terms. Our advice: Don't go into detail. Shortly after an employee is fired, make a brief statement to your other workers, saying that the employee is no longer with the company. Tell them who will handle the tasks that person was responsible for and ask them to direct any questions to you.

What To Tell Potential Employers

When a potential employer calls for a reference, you may feel trapped between wanting to tell the truth and fearing a lawsuit if you say anything unflattering. Unfortunately, this fear is not unfounded. Plenty of defamation lawsuits have been filed over negative references. And, even if your former employee can't successfully prove that you defamed him or her, you will have to spend precious time and money fighting the allegation.

Here are some tips to help you avoid problems:

  • Warn a difficult employee that your reference won't be good. Yes, the employee should know this already. But you can avoid problems at the outset by stating the obvious: "I cannot provide a positive reference for you."
  • Keep it brief. Some employers adopt a policy of giving out only dates of employment, job title, and final salary to prospective employers. If you choose to tell more, keep it to a minimum.
  • Stick to the facts. Now is not the time to speculate about your former employee's bad qualities, or to opine on the reasons for his or her failure to perform. Limit your comments to accurate, easily documented information.
  • Don't be spiteful. Many states offer some protection for former employers called upon to provide a reference. These laws generally provide that you will be shielded from defamation lawsuits as long as you provide information in good faith. This is a fairly nebulous legal standard, but it surely does not cover nasty or mean-spirited gripes.
  • Don't give false flattery. If you had to fire a really bad egg (for example, a worker who was violent in the workplace or threatened coworkers), don't lie about it. You may choose to give only name, rank, and serial number, but, if you give a more expansive reference, don't hide the bad news. You may find yourself in legal trouble for failing to warn the new employer if these serious problems resurface in the employee's next job.
  • Designate one person to give references. Choose one trusted person in your company to be responsible for all references and tell all of your employees to direct inquiries to that person. Make sure that a record is kept of every request for a reference and every response, in case of later trouble. And you may want to adopt a policy of providing references only in writing, so you'll have proof of exactly what was said.
  • Insist on a written release. If you want to make absolutely sure that you're protected against lawsuits, require former employees to sign a release -- an agreement that gives you permission to provide information to prospective employers (and promises not to sue over the information you provide).

Some More Tips About Giving References

  • Develop a written policy that states exactly what the policy is regarding giving references. It should state what information will be given and how it will be given – by whom, to whom, and in what format. However, make it flexible enough that you can evaluate individual cases that may raise particular issues.
  • Review and update the policy on a regular basis.
  • Consider establishing the rule as part of your policy that you will only respond to written requests for references and responses will only be in writing. It is preferable that someone in human resources be the designated person to provide references. Information provided should be based on documented information in the employee’s file.
  • Good employment practice suggests that the employer discuss the employee’s performance with him or her on a regular basis, carefully document the facts about the employee’s performance, and share information in that employee’s personnel file with the employee. Access to this information should be limited only to those who have a clear and critical need to know. Employees should understand that any references will be based on what is in the file.
  • If an inquiry is made by phone, and you do choose to give verbal information, get the name, title, and phone number of the person requesting the information, verify that the number is indeed that of the company, and then call back to verify the caller’s identity.
  • Consider only verifying information provided by employers requesting references rather than volunteering information.
  • Whenever possible, obtain a written release from the former employee that authorizes providing references before doing so. Employees could sign such a release when hired. This will not give complete protection, but it may help the former employer argue that the employee consented to having the information released.
  • Record all information about a reference at the time it is given: date and time; name, title and company of the person requesting the information; name and title of the person responding; a statement of the information provided, and the form in which it is provided. A standard form is helpful for this. Attach copies of any letters written.
  • The best advice for employers is still to say as little as possible or just verify employment dates and title except in those situations where the employee’s behavior could endanger the well-being of others in the workplace.

State Laws May Come Into Play

New Mexico

N.M. Stat. Ann. § 50-12-1 summarizes the types of information that may be disclosed by an employer about a former employee:

Information that may be disclosed:

  • job performance - Keep in mind that if an employer wants to disclose an employee’s poor job performance (which may include issues of conduct and/or behavior), there must be proper documentation that exists in the employment file that will substantiate the claims of poor performance.

Employer may be immune from liability unless:

  • Information disclosed was known to be false or was deliberately misleading.
  • Disclosure was careless or violated former employee’s civil rights.

California

Cal. Civ. Code § 47(c); Cal. Lab. Code § § 1053, 1055 summarizes the types of information that may be disclosed by an employer about a former employee:

Information that may be disclosed:

  • job performance - Keep in mind that if an employer wants to disclose an employee’s poor job performance (which may include issues of conduct and/or behavior), there must be proper documentation that exists in the employment file that will substantiate the claims of poor performance.
  • reasons for termination or separation
  • knowledge, qualifications, skills, or abilities based upon credible evidence
  • eligibility for rehire

Who may request or receive information:

  • prospective employer

Employer required to write letter:

  • public utility companies only

Conclusion

Employers today face a much more complex set of rules about providing references for former employees than was true only a decade ago. The “cut and dried” rule of issuing only the bare minimum of information possible is no longer reasonable and safe. Following such a course of action may help insulate an employer from liability under defamation claims. However, the “cut and dried” approach may open up the possibility of liability under the theory of negligent misrepresentation or negligent referral. Each employee reference must be evaluated in light of overall company policy. It must also take into account the facts in each individual case.

Managers should continue to exercise extreme caution in giving references for former employees, even in states with laws granting immunity to employers for giving such references. It is too early to tell whether these laws will provide adequate protection for employers because very few court cases have interpreted these statutes. However, a blanket policy of providing only cursory information to avoid defamation claims may result in a company failing to disclose certain information about some former employees that could lead to equally expensive liability for the company on other grounds. The best advice for employers is to say as little as possible except in those situations where the employee’s behaviors could endanger others in the new workplace. Not revealing information in that case is legally risky for an employer. In addition, employers have an ethical responsibility to those who may become unsuspecting victims of former employees if the company refuses to share important information.

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