Small Business Questions & Answers


Filed under Office & HR

Ask About Employee References -- Part 2

by Tentative in Tennessee | May 26, 2012

Subject :Human Resources

Dear Toolkit,

A local businessman called me this morning to check references on one of my former employees. I am at a loss to respond to his perfectly reasonable and sensible request. If I tell him why the individual is no longer in my employ, I could probably be sued by the former employee alleging defamation of character or whatever. If I don't disclose the reason, I could probably also be sued, in this case by the new employer who might suffer severe consequences if the person, for example, runs over hapless pedestrians while driving the company delivery truck--just as he came close to doing on several occasions with our van.

What do I do about giving out references on former employees? Looks like I can't win either way.

Tentative in Tennessee

Dear Tentative,

In Part 1 of this series on employee references, we discussed elements to consider in order to avoid defamation claims. Now that you're aware of what the major hazards are, let's take a look at a few suggestions on how to minimize your risks:

  • Truth is not defamatory. For this reason, refrain from making any statements that you are not prepared to back up and substantiate if you are sued. Give objective facts or opinions and conclusions that you can support with objective facts, rather than mere allegations, speculation or gossip. For example, you can safely state that an employee was fired for missing too many days of work. However, once you start providing unsubstantiated opinions on reasons for the absenteeism, such as that the employee was drinking too much or was into illegal drugs, you increase your risk of being sued.
  • Be clear and unambiguous. Keep in mind that statements that are technically true may still be defamatory if they are incomplete or misleading. Refrain from stating that an employee was terminated "for cause," "insubordination," "unsatisfactory performance" or other nonspecific reason, because such phrases may be defamatory by implication.
  • Be objective. The tone of your statements is also important. Your references should not sound petty, vindictive or accusatory. No matter how trying your relationship with the former employee may have been, you should try to discuss the facts in an objective way.
  • Be responsive. References should be limited in scope to information that the inquiring employer requests. This does not mean that you should feel compelled to provide all requested information, because generally you're under no legal obligation to provide employment references at all. Rather, the notion here is that you should not volunteer any unfavorable information that is not requested.
  • Stick to job-related facts. Do not provide any information that is irrelevant to the employee's performance or behavior in the workplace. Comments about an employee's personal life are especially hazardous, because even if the comments are true, they may raise invasion of privacy issues.
  • Talk only to prospective employers. Avoid disclosing employee information to those persons who don't have a legitimate interest in that information. A statement that is not defamatory when made to a prospective employer may be defamatory if it is made to others who have no business reason to know the information.
  • Avoid telephone references. Because you need to be sure that a person to whom you are providing an employment reference has a real business interest in receiving the information, you should use care in providing references over the phone. The better alternative is to have the caller make the reference request in writing.
  • Service letters. Some states have "service letter" laws that may require employers to provide letters concerning past employment services ("service letters") to former employees upon their request.
  • Get signed consents. Your best protection against defamation and other claims that may arise from giving employment references is to get the former employee to consent to your release of such information.

You should document the employee's consent to your providing information in response to reference requests by having the employee sign a written release authorizing your disclosure. You should also consider adopting a policy of providing detailed references for former employees who have signed written releases and restricted references of only basic employment data for former employees who have not signed releases. This type of flexible policy will help show that the employee had a real choice in deciding whether or not to sign the release.

Tools to Use

In the Business Tools area is a sample release form that you can print and modify for use in your business.

A signed release is an insurance policy that will limit your exposure to liability if you accidentally make statements that are incomplete or misleading or that otherwise may be construed as being defamatory. But a signed release will not get you off the hook for any irresponsible statements you may make.