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Giving references gets risky

October 8, 2013

Because of legal dangers in providing information in references for former employees, employers need to be cautious. Former employees have sued their employers and won large sums of money over the type of information provided — or withheld — in references. In response, some employers will now confirm to an inquirer only that a person was employed.

Giving a work reference for a former employee can be risky. This is particularly true when the request regards a less-than-satisfactory employee, and you speak spontaneously and without prior thought.
The safest response you can give when you are asked for an employee reference is this: The employee’s date of employment with your company. If the employee was full-time or part-time. A description of the position the employee held. The employee’s salary range.

Can you be honest in what you tell? If you stick to the topics above, being honest will not be a concern. But if you tell a prospective employer the employee was rude and a constant source of irritation to you,  you may be expressing views which could lead to defamation charges.

Also, you can’t just refuse to give out any information about former employees and avoid all possible problems. Even this strategy isn’t risk free. Some courts have held the refusal to give a reference for a former employee while providing references for other employees is itself defamatory.

In addition, failure to tell a prospective employer truthful, but negative, information about a former employee can lead to “negligent referral” and “negligent misrepresentation” lawsuits. Negligent referral and negligent misinformation lawsuits assert a former employer has failed to disclose complete and accurate information about former employees. The argument is made that the former employer’s failure to provide truthful, negative information led to a hiring that resulted in damage or harm to the new employer or to the employees or customers of the new employer. Examples of damaging and harmful acts include theft, violence and sexual assaults.

Consider the following in developing a reference policy:

Require a terminating employee to give you written permission to respond to a reference check.

Ask that requests for reference checks be made in writing.

When responding to a request, put your comments in writing. This protects you from being misquoted later.

Put a reference response system into place and make sure that only the people you authorize are handling requests for employee references.

Keep any information and responses you provide job-related.

Before you adopt a reference policy, check your state’s laws concerning references. The laws on this can vary from state to state. Some states place a restriction on what type of information can be released without the employee’s written authorization.

Also, many states have shield laws giving legal protection to employers when they provide truthful, work-related information about former employees to prospective employers.

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