Publications
Defamation Risk #2:
How to You Respond to a Request for a Reference?
What should you do when a prospective employer asks for a reference on a terminated (or any other former) employee? If avoiding lawsuits and liabilities is your priority, our recommendation is simple: confirm dates of employment and positions held, release compensation information only if provided with a signed release, and say and disclose nothing more.
From a risk management perspective, there is no upside, and lots of downside, to the violation of this rule. If, believing that you are being completely truthful, you disclose that the employee was a poor performer, you again open the door to a defamation claim. Some states have passed statutes in an effort to protect employers against such liabilities, but they are far from foolproof.
And the risks extend beyond the defamation sphere. For instance, if you mention that the employee had a bad back or had been on sick leave, you run the risk of violating the prohibition of the ADA (and other laws) against disclosing medical information.
Although a bit far fetched, there have even been cases in which a positive reference led to a lawsuit. Suppose you have an employee with violent propensities and, happy to get him out the door, you give him a positive reference. If he harms someone at his new place of employment, you might be on the hook -- once you start telling what you know, you can be liable for misleading a prospective employer unless you tell the whole story.
Caveat #1: This may be an exception to the general “say nothing” rule. Depending on where you conduct business, you could be liable for not disclosing the potential of an employee to cause harm to others. Check with counsel.
Caveat #2: To avoid the argument that, by not giving a reference, you singled someone out for special adverse treatment, as well as the argument that your failure to provide the reference implied to a prospective employer that the employee in question was unfit, establish a written policy regarding references, and train your employees to live by it.
Caveat #3: We recognize that many HR professionals seek to encourage the free flow of employee reference information, and will provide substantive references (and expect them in return). That’s OK – so long as management understands the risks, and has made an educated business judgment that the benefits outweigh them. On a selected basis among HR professionals who trust each other, sometimes the risks are worth it.
Counsel Consulting Group LLC helps companies throughout the United States avoid employment and HR-related claims and liabilities. CCG assesses existing policies, procedures and problem areas; it provides customized liability-avoidance training to managers and executives; and it designs and implements business techniques that reduce employment liability risks on a long term basis. CCG also offers specialized workshops for managers and HR executives, customized consulting in focused employment-related areas, and CD-ROM and web-based training alternatives. For more information, contact us at info@powelltrachtman.com and visit our website at www.counselconsulting.com.
Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.
