If you’ve recently lost your job, you may be concerned about what your former employer will say to companies that ask for a reference. References often make the difference between landing a new job and receiving a rejection letter. If a former employer is giving out false or misleading information about you, it could doom your job search.
Indiana, like many states, protects employers who provide certain kinds of reference information to prospective employers from defamation lawsuits. However, 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.
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?)
An employer in Indiana is immune from liability (that is, the employer may not be sued) for providing information about a current or former employee, unless the employer knew that the information was false.
Employees in Indiana also have the right to see what an employer is saying about them. An employee has the right to receive copies of all written information provided to a prospective employer by a current or former employer. The prospective employer has an obligation to provide this written information as long as the employee requests it within 30 days of applying for a job.
While some employees wish their former employers would keep quiet, 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. Indiana requires employers to provide a service letter to an employee who is discharged or quits, stating whether the employee was discharged or quit.
The employer must provide a service letter only if the employee makes a written request. Employers do not have to provide service letters if they do not require written recommendations or applications for employment.
If you want a former employer to provide more detailed information than the law requires, 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, this makes sense only if you are absolutely certain that the reference will be positive. It may be worth giving 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.