Giving References for Former Employees

Whenever one of your employees leaves, you will have to decide what to say to other employers who call for a reference. The decision is pretty straightforward if the employee left on good terms: You and your former employee can come up with a mutually agreeable statement to explain the departure. Or, you can simply tell the whole glowing truth to any prospective employer who calls for a reference. But if the employee was fired, you face a more difficult task.

Defamation Lawsuits: The Fired Employee's Revenge

If you are not careful in your statements about former employees, you might find yourself facing a defamation lawsuit. To prove defamation, a former employee typically must show that you intentionally damaged his or her reputation by making harmful statements about the employee that you knew to be false.

At first glance, it might seem like only the most spiteful employer would get caught in this trap. But, if you make an unflattering statement that you don't absolutely know to be true, it could happen to you. Let's face it: Most reasons for firing make the employee look bad. And an employer often cannot prove what he or she strongly believes to be true -- that an employee is stealing from the company, is incompetent, or lied about job qualifications, for example. An employer who makes such statements about a former employee could get into trouble. Your best policy is to say as little as possible and stick to facts you can prove.

What to Tell Potential Employers

When a potential employer calls for a reference, you may feel trapped between wanting to tell the truth and fearing a lawsuit if you say anything unflattering. Unfortunately, this fear is not unfounded. Plenty of defamation lawsuits have been filed over negative references. And, even if your former employee can't successfully prove that you defamed him or her, you will have to spend precious time and money fighting the allegation.

Here are some tips to help you avoid problems:

• Warn a difficult employee that your reference won't be good. Yes, the employee should know this already. But you can avoid problems at the outset by stating the obvious: "I cannot provide a positive reference for you."
• Keep it brief. Some employers adopt a policy of giving out only dates of employment, job title, and final salary to prospective employers. If you choose to tell more, keep it to a minimum.
• Stick to the facts. Now is not the time to speculate about your former employee's bad qualities, or to opine on the reasons for his or her failure to perform. Limit your comments to accurate, easily documented information.
• Don't be spiteful. Many states offer some protection for former employers called upon to provide a reference. These laws generally provide that you will be shielded from defamation lawsuits as long as you provide information in good faith. This is a fairly nebulous legal standard, but it surely does not cover nasty or mean-spirited gripes.
• Don't give false flattery. If you had to fire a really bad egg (for example, a worker who was violent in the workplace or threatened coworkers), don't lie about it. You may choose to give only name, rank, and serial number, but, if you give a more expansive reference, don't hide the bad news. You may find yourself in legal trouble for failing to warn the new employer if these serious problems resurface in the employee's next job.
• Designate one person to give references. Choose one trusted person in your company to be responsible for all references, and tell all of your employees to direct inquiries to that person. Make sure that a record is kept of every request for a reference and every response, in case of later trouble. And you may want to adopt a policy of providing references only in writing, so you'll have proof of exactly what was said.
• Insist on a written release. If you want to make absolutely sure that you're protected against lawsuits, require former employees to sign a release -- an agreement that gives you permission to provide information to prospective employers (and promises not to sue over the information you provide).

For more help in dealing with difficult employees, get Dealing with Problem Employees: A Legal Guide, by Amy DelPo and Lisa Guerin (Nolo).