How to Avoid a Potential Lawsuit When Giving References

Avoiding Lawsuits from Employees

Make your employees aware of your policy. As always, an ounce of prevention is worth a pound of cure. Make sure that you have a standard policy in place for giving references. That way, you can minimize the chances that an employee will even be tempted to bring a suit against you. Make sure that all relevant personnel, such as HR, are aware of the reference policy from the beginning of their employment with your firm. It’s not a bad idea to give all new hires a quiz on the reference policy. That way, you can both emphasize its importance and make sure that your employees know the policy backwards and forwards.

Make as few people responsible for giving references as possible. Another great way to prevent a reference going awry is by designating a few trusted and discrete individuals to give references, and only those individuals. In a lot of ways, this element of your policy just boils down to experience. The more often an employee gives references, the less likely they are to say the wrong thing. When an employee is promoted into a position where they would give references, make sure they’re closely supervised for the first several references.

Put requests in writing. Create a standard form for requesting a reference that you can email any former employees. That way you create a detailed record of each request. If a prospective employer contacts you requesting a reference about a former employee and the employee hasn’t filled out a request form, politely decline to give the reference and advise the employer of the reason why. For example: “While I’d be more than happy to give Tom a reference, it’s actually against company policy to provide references without the employee filling out a written request form. If you’ll have Tom reach out to us, I’d be happy to send him the paperwork.” Be sure to include on the request form a statement about the risks that are inherent in giving out references, and that it is possible that the reference could work to the employee’s disadvantage. While no form will completely absolve you of liability, advising the employee of the risks inherent to the process will provide an additional level of protection.

Make it quick. There is typically little reason to write a lengthy employment reference. It’s best to keep your references short—the less said, the smaller the possibility of exposing you to liability. Provide dates of employment and the most important details of the employee’s tenure, e.g., their most salient successes and failures. Try and make sure that you simply answer the questions asked, rather than volunteering a great deal of unsolicited information.

Stick to the facts. Truth is an absolute defense to defamation. Strive to keep your references objective, factual, and not filled with subjective judgments. The easiest way to stay factual is to only include what is objectively verifiable, without subjective commentary. For example, don’t say: “Johnny was a hopeless drug addict,” which is a judgement that could be disputed. Instead, say “Johnny failed seven consecutive drug tests, three of which he had advance notice of.” Avoid the temptation to attach negative judgments to your objective statements. For example, don’t say: “On three instances, the cash register was short by more than $100 while Jane was responsible for the till. I really question her honesty.” Leave out the judgement in the second sentence. The facts speak for themselves.

Give written references instead of phone references. Unless a phone reference is recorded, the contents are subject to dispute. Since a written record cannot be disputed, you give yourself greater protection from liability by only giving written references.

Treat good references and bad references exactly the same. A lot of employers will be inclined to throw all of the rules out the window when it comes to giving a good reference. Don’t. If you have a recorded history of giving glowing and highly subjective references to good employees, and then give a laconic reference containing only objective information about a poor employee, the contrast can speak volumes. While it is unlikely that giving good references will land you hot water, nothing particularly good will come from a deviation from objectivity. As always, the facts speak for themselves. A good employee will have objective information in their work history indicative of their talents.

Avoiding Lawsuits from Employers

Don’t cover for problem employees. It’s quite possible that you have former employees whom you like personally, but who are nonetheless unemployable. While it might be tempting to omit problems that arose while they worked for you (especially if you think the problem is resolved), you shouldn’t. If an employee causes harm at another firm, and that firm finds you intentionally misrepresented that employee’s work history, they may take legal action against you. Be especially leery of omitting details of an employee’s history of violence, theft, sexual harassment, or substance abuse. These behaviors can cause irreparable harm to the people in the new employer’s company. Indeed, the damage flowing from these behaviors would be the major reason that another firm would go through the expense of legal action.

Don’t exaggerate the accomplishments of a good employee. It might be tempting to try and give a good employee an extra advantage so they get the job they want and you believe they deserve, but you shouldn’t do it. Imagine that you receive a reference from a former employer claiming that a prospective hire is capable of handling a type of heavy machinery. In fact, your new employee has no experience with that particular piece of machinery. When the employee operates the machine, something goes wrong due to their inexperience. Another worker is seriously injured and your very expensive piece of machinery is ruined. Might you be inclined to take legal action against the party who assured you of that employee’s skills? Exactly.

Tell only the truth. It all boils down to telling the truth. Truth is an absolute defense to defamation, and no employer can find that you made a misrepresentation if you stick to the truth. You have to remember that telling the truth, the whole truth, and nothing but the truth is the most effective protection from liability. Give possible employers objective facts, not subjective judgements. It is much more difficult to misrepresent an objective fact than a judgement.

Understanding the Basics of Defamation

Say something false, and you open the door to liability. Falsehood is the foundational element of defamation—the basis for employee-employer reference lawsuits. For a statement to be defamatory, it must be false. An opinion can never be defamatory. Everyone has a right to their opinions, so saying “Susan is shifty” is not a defamatory statement. However, saying that “Susan defrauded her employer” is a statement of fact, and if found to be untrue, is the beginning of a defamation claim. Most employers won’t falsely state that an employee committed a specific act at a specific time. The problem with employee references is that many of the statements contained therein are in a gray area. For example, if you say that “Susan is a thief,” is that a statement of fact or opinion? It’s questionable, and it might depend on follow-up statements. This is why it’s so important to stick to objective facts.

Neglect to verify the truth of a statement, and you satisfy the second element of defamation. If you repeat a statement you know to be false, or that you recklessly or negligently fail to verify, you are well on your way to defaming someone. The law at least attempts to be reasonable, so honest mistakes aren’t defamation. For example, if you conducted a background check on Susan, and it said she was convicted of larceny, you have a reasonable justification for believing that Susan is a thief, even if it turns out the background check was in error. However, if you just heard that she was a thief, it would be negligent for you to spread that information without making a good-faith attempt to verify it. Although this usually wouldn’t apply to an employee reference, it bears stating. A public figure cannot be negligently defamed. For a public figure to be defamed, a person would have to intentionally or recklessly spread an untruth.

Giving a reference equals publication. The final element of defamation is publication. Publication isn’t used in the conventional sense of the word. In the context of defamation, it only means spreading the untruth to a third party. You don’t have to print the untruth in a newspaper or post it on a blog. Simply giving a reference to a prospective employer, whether written or spoken, will count as publication.