It was once a common practice for employers to provide positive letters of reference to their former employees for use when applying for a job with a new employer. However, given the legal landscape today, providing a positive – or even a neutral – letter of reference can sometimes spell trouble for employers.

“Negligent Referral or Misrepresentation”

The kind of trouble that occurs most often comes in the form of a lawsuit for “negligent referral” or “negligent misrepresentation.” In these cases, if the employer is aware of a former employee’s troubled history (for example, a history of violence, drug use, or sexual misconduct) and recommends the former employee without disclosing that history to a new employer, the recommending employer could find itself on the receiving side of a costly lawsuit when the employee is then involved in an alleged “foreseeable” incident at his or her new place of work.

For example, in Kadlec Medical Center v. Lakeview Anesthesia Associates, when he worked for his prior employer, a doctor was involved in a prescription drug diversion scheme in which he would use narcotic drugs purportedly withdrawn for patient use. 2005 U.S. Dist. LEXIS 9204, *4-5. (E.D. La. May 9, 2005). After firing the doctor, the prior employer sent letters of reference to future employers without disclosing anything negative regarding his employment history. Id. at *5. After starting work with his new employer, the doctor then performed a “routine” surgery on a patient while high. The patient suffered extensive brain damage and remained in a non-responsive, vegetative state. The patient’s family sued the new employer for medical malpractice. After settling with the family for approximately $7.5 million, the new employer sued the prior employer who had written the recommendation. Id. at *1. The court found in favor of the new employer. Id.

Similarly, in Randi W. v. Muroc Joint Unified School District, a student who alleged that she was sexually molested by a teacher was allowed to pursue her claim against the teacher’s previous employer which had provided the new school with a positive letter of reference. 14 Cal. 4th 1066, 1070 (Cal. 1997). The former school district was allegedly aware that the teacher had made inappropriate sexual remarks to female high school students, had been involved in “sexual situations” with them, and had allegedly “led a panty raid.” Id. at 1071-072. Several school officials with which the teacher previously worked wrote letters of recommendation that contained no hint of these disturbing facts, and instead contained unconditional praise for the teacher. For example, one letter stated that the teacher showed “genuine concern” for students and concluded, “I wouldn’t hesitate to recommend [the teacher] for any position!” Id. at 1072. The court concluded that the prior employer could foresee that the new employer “would read and rely on defendants’ letters,” and that, after being hired, the teacher “might molest or injure a student.” Id. at 1078. The Supreme Court of California held that the student adequately stated a cause of action and that the prior employer could be liable for fraud and negligent misrepresentation.

Inaccurate References Can Be Held Against Employers  

Even outside the context of these more dramatic situations, we have recently seen that inflated letters of reference for departing employees can make trouble for employers in less obvious ways. If you are terminating an employee for his or her poor performance, it is simply not a good idea to then provide a positive letter of reference.

For example, in Qualls v. Regents of the University of California, an employer was initially unable to fight off a race discrimination claim at the district court level, since its positive letter of reference created doubt about whether the plaintiff was truly fired for poor performance. 2015 U.S. Dist. LEXIS 127825 (E.D. Cal. Sept. 23, 2015), rev’d in part, 2015 U.S. Dist. LEXIS 152581 (E.D. Cal. Nov. 10, 2015).

In that case, after the University terminated an African American lecturer’s employment, the lecturer then accused the University of race discrimination. The University presented overwhelming evidence that it terminated the lecturer’s employment because he performed poorly. For example, he was consistently tardy to classes he taught and spent “a considerable amount of class time showing YouTube clips that had little to do with the course material.” 2015 U.S. Dist. LEXIS 127825 at *4. Additionally, he was caught plagiarizing material and he broke school policy by submitting a grant proposal without permission by falsely representing that another faculty member had reviewed and endorsed the proposal. Id. at *6-10.

The University moved for summary judgment to dispose of the race discrimination claim, citing these facts as proof that the lecturer was fired for poor performance and not because of his race. However, the court initially refused to grant summary judgment because the lecturer’s supervisor provided him with a post-employment letter of reference that stated that the University decided not to renew his contract for “budgetary reasons,” and that he had “consistently and professionally fulfilled all his responsibilities for teaching and service.” Id. at *32. While the court eventually reconsidered and reversed, granting summary judgment in favor of the University, this case illustrates the unfortunate and unnecessary legal costs that employers can face if they provide “positive” letters of recommendation despite an employee’s substandard work record. 2015 U.S. Dist. LEXIS 152581, at *21.

“Confirm Employment” Rather than Providing a “Full-Blown Reference”  

Given these legal challenges that providing reference, whether in writing or otherwise, presents, employers are well advised to avoid routinely providing references.  Instead employers should implement policies or practices of simply confirming employment. Such “confirmation” can include objective, limited information as to the nature of the former employee’s employment, rather than a subject assessment of a person’s skills, attitude, character, trustworthiness, integrity, etc.  Any responses, whether in writing or over the phone, to inquiries from prospective employers concerning a former employee should be limited to stating the former employee’s dates of employment, title, duties and responsibilities, certification or proficiencies achieved, and promotions.  In cases where the former employee’s separation was due to his/her voluntary resignation or due to no fault of such employee — such as due to a restructuring, layoff, or the closing of a facility — employers can indicate such without fear that providing such information can be used against them in the future.  To avoid supervisors and others running into these legal challenges, a Human Resources professional or other senior manager should be designated to provide responses to inquiring prospective employers to ensure that company policy/practice is followed, and to confine such response solely to confirming employment.  Such designee should carefully document his/her response to any inquiring employer so a record exists as to what information was shared.  In those rare situations when an expansive reference request is provided going beyond simply confirming employment, such as an agreed-upon reference provided in connection with resolving employment litigation or other disputes, such reference must be accurate and should be drafted to avoid “negligent reference” claims.