Legal hassles can arise when you give references for former employees. These former employees might turn around and sue your organization for defamation. Here’s a quick review of the ins and outs of giving references for former employees.

First the facts

Defamation involves communicating false information. Defamation with malice involves communicating information — even true information when the intent is to harm the former employee’s job opportunities. Following are some helpful definitions:

  • Defamation is damaging the reputation, character or good name of a person by libel or slander.
  • Libel is publishing or communicating false information which maliciously damages a person’s reputation.
  • Slander is orally communicating false information which injures a person’s reputation.
  • Conditional privilege. Some states allow employers a “conditional privilege.” It protects references made in good faith, even if the statements are false. (Note: A conditional privilege won’t protect you if the reference was negligent or malicious in nature, or if it was made to someone who had no business knowing the facts.)

In view of the problems with references, many employers simply say “No comment.” This isn’t always the best approach. Here’s why. Some employees have won defamation suits even if their employers did not communicate false facts. It’s called “compelled self-defamation.”

Case Study

A case in point is Lewis v. Equitable Life Assurance Society. Four employees, each of whom had good work records, were discharged for “gross insubordination.” What was their mutinous action? They refused to falsify their expense accounts after a business trip. Because Equitable’s policy was to not give references, and because the former employees had to tell prospective employers they were fired for bogus charges of “gross insubordination,” a Minnesota court found Equitable liable for damages. How much money? Each of the four plaintiffs was awarded $150,000!

How to Help Improve the Odds that References Don’t Land You in Hot Water

Here’s a way to put a halt to reference lawsuits: Ask former employees to help write their references.

Insist on an exit interview with each departing employee. Then show employees a written summary of their performances. This summary serves as a reference if two conditions are met:

  • The employee gives written approval then and there to the summary
  • The employee, in the future, mails the employer a signed statement releasing the summary to a prospective employer

If an employee objects to the summary, limit future references to:

  • Position held,
  • Employment dates
  • Salary information

Key Tips

Tell the truth. It’s a defense to any defamation claim. Make sure you use objective, not subjective, statements. Not: “She’s lousy at keyboarding.” Instead: “She entered 22 words a minute and averaged seven errors per one page document.”

Offer appropriate information. Example: Mary applies for a janitorial position. Her prospective employer shouldn’t know she had trouble with a software program.

Keep spite out of it. A jury may forgive you an honest mistake. But it will toss the book at you if your personal vendetta against the former employee prompted the discharge.

Authorize only one person in your organization to give out information on former employees. And train the person in how to do so in ways which will not create potential liability.

If you allow more than one person to give out information on former employees, train all of them in how to do so safely and legally.

Don’t volunteer information to those inquiring about former employees. Respond only to questions asked by persons with a legitimate need to know.

Give out only objective facts, not opinions and gossip.