When providing an employment reference you can’t get in trouble if you only confirm an employee’s position, salary, and dates of employment, right? Maybe. But, you could be hurting your former employee’s chance at a new job and doing a disservice to other employers.
With the current unemployment rate, the employers that are hiring have more candidates than ever to choose from, many that have stellar work histories and resumes. As a result, a positive, honest assessment of a worker’s abilities from a previous employer may be a deciding factor in who gets the job offer.
Yet, when asked to provide a reference for a former employee, many employers limit their response to position, salary, and dates of employment. While this approach may limit your liability for defamation claims, these policies can punish good employees by limiting their managers’ ability to provide an honest appraisal to prospective employers, and may make it easier for individuals with poor performance or other problem behaviors to be passed on to an unsuspecting organization. It could even result in claims of providing negligent references if you conceal documented information about an employee.
Yes, there are legal risks to giving references but you have several defenses against these claims, including truth, privilege, and waiver. Many states have laws that protect employers when they provide truthful, good faith job references. Therefore the advantages of a more liberal, but legally sound, policy may outweigh the liability risks. And with more employees laid off for economic reasons versus performance problems, a shift in policy is important.
Defamation, Negligent Reference Claims Raise Concerns
There are many legitimate reasons to be concerned about lawsuits that can result from providing inaccurate references and fear of them causes many employers to set reference policies that are impractical and unhelpful to both employees and their prospective employers.
One concern is fear of charges of defamation. Defamation is the act of harming another’s reputation by libel (in writing) or slander (verbally). An employer could be liable for defamatory post-employment references if a company official provided statements that they do not have documentation to support. Additionally, individuals making the comments can be held personally liable for defamatory remarks.
There are ways to defend against these claims however. First, truth is the best defense against any defamation claim and, you can rely on “qualified privilege”. “Qualified privilege” means that post-employment references are not defamatory unless the employer knowingly discloses false information or makes the disclosure regardless of the employee’s rights. “Good faith reference” laws in many states (including Illinois) protect employers who give truthful references. These laws vary, but generally, the employer is not liable if the reference was given in good faith and without malice. The laws typically impose certain restrictions on the references in order for the protections to apply, such as requiring that the reference request and response be in writing. You should be aware that “good faith reference” laws are only a defense and cannot prevent a lawsuit. These laws are not a substitute for following your policy and procedural safeguards, such as requiring a signed consent form prior to providing references.
If you give too little information or “gloss over” problem areas, you may trigger a different risk – a negligent reference. For example, an anesthesia group terminated a physician for on-the-job drug use that, as stated in its termination letter, “put patients at significant risk.” They later provided a glowing reference for the physician. The group’s statements that the terminated physician was an “excellent anesthesiologist” when it recommended him highly were “false” and “materially misleading” according to the court. As a result, the group was liable to the hospital that hired him after a patient was permanently injured by mistakes the anesthesiologist made when he was under the influence of drugs.
You may be able to prevent claims of negligent references by providing truthful, factual responses to questions from prospective employers where the facts have been accurately documented in the employee’s personnel file. Additionally, the information should be disclosed if the employee would be in a position to repeat the harmful behavior. However, if the employer is not sure about a former employee’s involvement in an injurious act, it should only confirm that it would not rehire the employee.
Three Reasons to Give References
There are benefits to providing useful and balanced references, including:
1. Cutting your unemployment compensation costs. Restrictive reference policies make it difficult for unemployed former employees to find new jobs if they cannot prove their past performance and qualifications.
2. Building goodwill with former employees. If your former employees know you are going to be fair and evenhanded in your references, they will be appreciative and may help build up your reputation both with other employees and with business partners.
3. Other employers may take notice of your policies, and if you give better references, you might get more helpful ones in return.
Eight Practical Tips for Providing References
If you are willing to accept the challenge of giving accurate references, there are several steps you can take to limit potential legal risks and ensure consistency when you give references. Here are eight tips that will help you provide fair and accurate references:
1. Establish and follow a policy on giving references. Share your organization’s policy on past-employment references with all employees.
2. Obtain the employee’s written consent to give references to all prospective employers. If the employee does not provide the written consent, you should not provide a reference.
3. Explain your reference policy during the exit interview. You should explain that any information disclosed is supported by the employee’s personnel records. You should also be honest with employees about the real reason for an involuntary termination so that later references will not be a surprise.
4. Use standard form letters of recommendation for employees terminated by layoffs or reductions-in-force. For each employee, state the business-related reason for the layoff or reduction-in-force and note that this does not reflect the employee’s job performance. The letter should indicate that affected employees were given the form letter and that the employer will release further information with the employee’s express, written consent. Once the employee has given consent, any specific job performance information should be communicated directly to the prospective employer.
5. Verify the reference checker. When contacted for a reference, take the requester’s name, company, and phone number and call back to verify the legitimacy of the request. If you do not think a request is valid, you should refuse to respond and then document your reasons.
6. Review the employee’s personnel file before answering the reference request. All remarks made should be supported by the records in the employee’s file.
7. Answer only the questions the prospective employer asks. Do not volunteer information and limit remarks to truthful, objective, and well-documented information from the employee’s personnel file – such as dates of employment, positions held, earnings, eligibility for rehire, job performance, qualifications and skills, work habits, and behaviors, reason for leaving, and documented performance problems, misconduct, or policy violations.
Topics to avoid include protected class membership (age, race, religion, national origin, and disabilities), medical/health issues, personal or confidential matters that are not job-related, and any subjects prohibited by your reference policy. In addition, you should consult legal counsel before providing references for employees who have violent tendencies, have been terminated for gross misconduct (such as theft, drug use, or sexual harassment), or have made legal complaints against the organization.
8. Document, document, document. After giving verbal references, document the questions and your responses. Make sure that you have adequate records of the reference conversation in case you have to recreate it at a later date. If you respond in writing, retain a copy for your files.
Give References That You Would Want to Get
As with many decisions, you have to weigh the risks of providing meaningful references against the possibility of legal liability. You can be risk-averse and give only limited references that simply verify employment. Or, you can be more proactive and provide information in a legally sound manner by incorporating the eight steps listed above.
Availability, Inc. is a leader in professional office staffing in the St. Louis region. Our staff stays current on state and federal employment laws and issues through continuing education, employment law courses and membership in the American Staffing Association. Our clients rely on us to help them stay up-to-date on changing federal and state employment laws. This information is not intended nor should it be used as a substitute for legal advice or opinion.