Reference Laws in South Dakota

Can a South Dakota employer be sued for defamation for giving out information about a former employee?

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If you are searching for a job, you may be concerned about what your former employer will say to companies that call to ask for a reference. References often make the difference between getting a job and receiving a rejection letter. If a former employer is giving out false or misleading information about you, it could make it very difficult to find new work.

South Dakota employers who provide certain types of reference information to prospective employers are protected from legal liability. As long as the employer acts in good faith and doesn’t go beyond what the law allows, the employer can’t be sued for defamation. But if a former employer acts maliciously or otherwise crosses the legal line, and you lose job opportunities because of it, you may have a legal claim.

References Based on Defamation Claims

To prove defamation, the plaintiff (the person bringing the lawsuit) must show that someone made false and damaging statements about him or her. In the context of employment, defamation claims nearly always focus on statements the employer makes about the employee once the employment relationship ends. Typically, a former employee claims that the employer made false, negative statements about the employee’s performance to a prospective employer who called for a reference, and the prospective employer decided not to offer the employee a job (or to rescind a job offer) because of the poor reference.  (To learn more about defamation claims, see Defamation Lawsuits: Do You Have a Case Against a Former Employer?)

South Dakota Reference Laws

In South Dakota, employers may not be sued for defamation (in legal terms, they are “immune” from liability) if they provide information about an employee’s job performance to a prospective employer. To qualify for immunity, the employer must receive a request for the information, in writing, from the employee or the prospective employer. The employer must also provide the reference information in writing, and must provide a copy to the employee upon written request.

An employer who follows these rules is presumed, legally, to be acting in good faith. An employee may sue for defamation only if the employee can prove, by clear and convincing evidence, that the employer:

  • provided false or deliberately misleading information knowingly, recklessly, or with malicious intent, or
  • disclosed information that it was required to keep confidential by law or due to a nondisclosure agreement.

Getting a Reference

While some employees wish their former employers would keep their mouths shut, some employees face the opposite problem: They want a former employer to provide information, but the employer isn't willing to speak up. Some employers are so fearful of defamation claims that they won't give references under any circumstances.

To remedy this situation, some states have enacted service letter laws. These laws require employers to provide former employees with certain basic information, in writing, about their employment. South Dakota doesn’t have a service letter law, however.  

If you want a former employer to provide a detailed reference, you might consider signing a release: an agreement giving the employer permission to respond to prospective employers who call for a reference, and giving up your right to sue the employer for anything said as part of that process.

However, you should consider this only if you are absolutely certain that the reference will be positive. It may be a good idea to give up your legal right to sue in exchange for a reference that will help you land a position, but you don’t want to sign away your rights only to find that you have no recourse against a former employer who damaged your reputation and job prospects. For more information, see Getting Good Job References. For information on your legal rights during the hiring process, see Nolo's articles on Getting Hired

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