As the economy worsens and unemployment increases, more job applicants are turning to litigation when they believe they have been turned down for a job based on a negative reference from a former employer. The fear of lawsuits leadsmany employers to adopt a “no comment” policy whenever asked about a former employee. Other employers choose to give only limited objective information, such as dates of employment, salary, and position held. Still other employers require job applicants to sign a waiver of their rights to sue over any job reference subsequently given.

Potential sources of liability

Potential causes of action against an employer for providing a negative review include defamation, tortious interference, and invasion of privacy or a claim of retaliation when the former employee has previously asserted a discrimination claim. In New Jersey, a former employee of Best Buy Company, Inc. sued the company, claiming that an HR manager wrote a defamatory e-mail about him to a prospective employer, costing him the job. In his suit, the former employee, Oliveri, said he became suspicious after job offers at Circuit City and Target were abruptly terminated. To test his suspicions, Oliveri created an e-mail account using the name of a Target employee. Then, Oliveri sent a note to his former company asking for a “candidate reference.” According to Oliveri’s lawsuit, the district human resources manager allegedly responded:

I will give you the skinny on him but you can’t say you got any info from Best Buy or we can be sued. Just don’t hire him and say you went with a better candidate. Mike was fired because he was inappropriate at an employee meeting. (long story). He was hired as GM and demoted after 12 months or so because he sucked. He is desperate for a job because supposedly his wife left him because he has no job. I would not touch him. Again, do not forward this e-mail to anybody or say where you heard the info from because we were not allowed to give this info out, but I would hate you to get stuck with this guy! . . .

The case settled for an undisclosed sum in May, 2008.

Employers can also be subject to a negligence claim if they give a falsely positive review or if they fail to disclose pertinent negative information about the former employee, sometimes referred to as a “negative referral” claim. For example, in Georgia, a lawsuit is pending for giving a favorable reference to a teacher who had been convicted of a sex crime and subsequently taught in a district where he was charged with raping a student. The student who was allegedly assaulted brought a suit against the school board who hired the teacher, the teacher’s former school system, and the principal of the teacher’s former high school, where the teacher allegedly was forced to resign due to the loss of his teaching license for sexually inappropriate conduct towards minor female students. The principal of the former employing school, who is being sued both individually and in his capacity as principal, allegedly gave a positive recommendation regarding the teacher, indicating that he was “outstanding” in every area. Further, the principal denied on the recommendation form that there was anything in the teacher’s personality, emotional history or background that would impair his usefulness in the new position. The court dismissed from the suit the teacher’s former school board and the principal, in his official capacity only. Both the new school district and the former principal, in his individual capacity, have filed motions for summary judgment which are currently pending.

Qualified privilege

Under the qualified privilege theory, employers can share job-related information about former employees, even negative information, if a legitimate business need exists. Most states have laws in place to protect employers from liability for giving references, as long as the statements are made withoutmalice. Among the states with job reference immunity laws are Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. Under these state statutes, a presumption exists that employers who disclose information about their employees to prospective employers have acted in good faith and will be immune from liability so long as certain conditions are met. Each state’s laws are different, and provide varying levels of immunity regarding what information may be disclosed, which individuals are protected by the privilege, whether the immunity extends to the prospective employer, and whether the disclosed information must be true in order to be protected.

Absolute privilege

Depending on the nature of the job sought, the privilege protecting a former employer’s statements may be even stronger, protecting an employer from liability regardless of its motive in making the recommendation. For example, the U.S. Court of Appeals for the Ninth Circuit, found that statements made by a former supervisor regarding the plaintiff’s job performance were protected by an absolute privilege because the plaintiff, in applying for a job as a safety inspector with the Federal Aviation Administration, signed a release authorizing the FAA to obtain information from prior employers regarding the plaintiff’s “achievement, performance, attendance, personal history, [and] disciplinary ... information.” Cox v. Nasche, 70 F.3d 1030 (9th Cir. 1995). The court held that an absolute, rather than qualified, privilege was particularly important in cases in which the employee applied for a sensitive position for which the free flow of information regarding the employee and his or her prior job performance may be essential. Statesmay also provide for absolute immunity in their statutory scheme. For example, Kansas provides absolute immunity for job references, providing an employer with immunity regardless of its motives in making the recommendation. However, this immunity applies only to the disclosure of specified information, such as dates of employment, pay level, job description, wage history, written employee evaluations conducted prior to the employee’s separation, and information regarding whether an employee was voluntarily or involuntarily released from service and the reasons for separation.

General guidance

As a general rule, even without a specific state statute, an employer is immune from liability for providing job reference information if the employer disclosed the information in good faith and without malice based upon common law protections. However, despite the protections provided to employers by these privileges, there continues to be an increase in lawsuits stemming from employer references. Given the foregoing, employers should ensure compliance with their own state’s laws, and implement a policy for providing job references consistent with the following guidelines: 

  • Only speak when spoken to.

The disclosure must be solicited. Do not disclose information without being asked for it or else the good faith presumption may not apply. 

  • Keep it professional and objective.

Only disclose information related to the employee’s job ability, performance or duties. Personal opinions about character or personality should not be given. 

  • Write it down.

Retain a record of the disclosures given, including the person to whom the disclosure wasmade, the entity with which that person is associated, the date of disclosure, and what information was disclosed. The record should be retained for at least two years. Consider developing a standardized form. 

  • Be honest.

Employers are not protected if they disclose information that is knowingly false, deliberately misleading, or made with reckless disregard for the truth. It is ultimately the employee’s burden to prove that an employer made a false, misleading, or reckless disclosure. 

  • Each case is different.

If there exists a specific employment-related agreement with the employee about whom a disclosure is made, make sure your disclosure complies with the terms of that agreement, as well as the applicable state law. For example, if a severance agreement exists stating that an employee’s file will reflect that the employee resigned, the employer should not subsequently disclose that the employee was in fact terminated.