References and letters of recommendation can be a damned-if-you-do and damned-if-you-don’t situation for employers.
Damned if you do… Fear of defamation lawsuits brought by former employees has altered the way employers provide job references. Companies have no legal obligation to provide prospective employers with information on their former employees. Because employers have been found liable for defamation after providing negative information about past employees, some employers have taken the position of providing no information about past employees except dates of employment, title and salary.
Damned if you don’t… However, if you do provide references, make sure they’re honest. Include negative information, particularly if the former employee behaved illegally or acted in ways that could endanger others. In a 1995 case, the 5th District Court of Appeal ruled that a young female plaintiff who was molested by her school’s vice principal could sue three former school districts that wrote glowing letters of recommendation for the vice principal, but failed to disclose their knowledge of his past sexual misbehavior.
The Appeals Court said that the author of a job recommendation letter has a duty “not to misrepresent the facts in describing the qualifications and character of a former employee, if making these misrepresentations would present a substantial, foreseeable risk of physical injury.” According to the court’s reasoning, employers have two viable alternatives to providing a reference that omits information about criminal, dangerous or illegal behavior: they can provide a “no comment” letter of reference that contains no affirmative representations about the former employee, or they can disclose all relevant facts regarding the past employee’s background.
Several states have developed legislation to protect former employers who provide negative information in job references. In Kansas, for example, an employer is immune from civil liability when providing references unless “lack of good faith” can be shown by “clear and convincing evidence.”
If you’re asked for references on a past employee whom you have reason to believe may become violent or harm someone, you may want to consult with an attorney specializing in employment issues before providing any kind of reference. In most cases, having a written procedure for providing references can help you avoid defamation suits. See the accompanying box for some suggestions. For more information on minimizing your employment practices liability exposures, please call us. Reference do’s and don’ts Develop a procedure for providing references about former employees. Do not permit employees other than those specifically designated to respond to employment inquiries.
Employers have no duty to disclose more than basic employment information about past employees, but opting for either full disclosure or no comment may be the safest approach.
To protect your firm from libel or slander claims from former employees, you’ll need employment practices liability insurance (EPLI). Your general liability policy does not cover employment-related liability. An EPLI policy does—whether the legal action involves a current employee, past employee or job applicant. If you already have EPLI, evaluate your coverage limits. Is it enough to protect your company from a large suit? A class action suit? Be sure to check whether defense costs are contained within the policy limits. If they are, this will reduce the amounts available to you for settlement or court awards.