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Employers could be Liable for Negative References

Employers could be Liable for Negative References


Nobody knows exactly when checking references became a staple crop on the human resource landscape. Perhaps a time machine would reveal that our prehistoric cave-dwelling ancestors did some background work to ensure that the Columbian Mammoth hunter they were recruiting ticked all of the right boxes (courageous, strong, nimble, good time management skills, etc.).


However, while reference checks have been around forever and are standard operating procedure for most jobs —including volunteer and intern roles — they remain a minefield for employers who share that their former employee is not going to be missed.


To Defame or Not to Defame


The issue here is not about manners: it’s about liability. Employers who “throw shade” on a former employee — or a current employee who is seeking greener pastures elsewhere — need to avoid crossing the line between valid feedback which is (probably) legal, and defamation of character which is certainly not.


Defamation is when a statement is communicated in some way to a third party that could arguably damage an individual’s good reputation in the eyes of a reasonable person. The statement does not need to be published, and contrary to popular belief, damage to reputation does not have to occur. It is enough for the damage to be possible.


It is also worth noting, again contrary to popular belief, that defamation is not the same thing as being insulted or being humiliated. Defamation concerns itself with reputation — not with feelings or pride. As such, an irate customer who swears and screams at a waiter in a restaurant is not committing defamation. However, if that customer takes that opportunity to falsely accuse the restaurant of failing a recent health inspection, then he or she has entered Defamation Country.


Truth or Duty Will Set You Free…Maybe


The two most frequent defenses of defamation allegations are truth and qualified privilege. The truth is, well, the truth! If a defendant can demonstrate that they were merely telling the ugly truth without embellishment or exaggeration, then they will not be held liable. Qualified privilege is when a defendant proves that they had a moral or legal obligation to make the objectionable statement or statements.


The Problem with Negative References


Generally, employers who provide a negative reference believe that they have not just one, but both of the above legal legs to stand on: they are telling the truth, and they also feel as though they have a moral obligation to warn other employees about the shortcomings — and possibly egregious violations — of a candidate moving through their hiring pipeline.


On the surface, this seems fine, and some might argue that it’s necessary — especially employees who really (really) don’t want to be saddled with a radioactive or toxic new colleague, and count on recruiters to conduct their due diligence before putting out the welcome mat.


However, the problem that gets some employers in legal hot water is that in the real world, truth is often tinted by perception and prejudice — conscious and subconscious. For example, Harry’s former boss may tell his prospective next employer that Harry had a “big punctuality problem.” But if there is no evidence of this on Harry’s performance reviews, then it could — and probably will — be challenged.


What’s more, the term “big problem” may be seen as subjective. What if during Harry’s tenure, his lateness was casually referred to as a “habit”? What if other people were also late, and it was an accepted part of the workplace culture? What if Harry’s boss is obsessively anal retentive about punctuality and in his view anything more than two minutes late is unacceptable? If this information is not provided to the prospective employer to help them put the statement “big punctuality problem” in full context, even with no malicious intention is Harry’s boss still telling the absolute truth, or just his perception of the truth?


This may seem like hair splitting and semantics, but the consequences to Harry could be life altering. For example, because of the “big punctuality problem” feedback, the prospective employer may decide not to hire Harry. Instead of a two week job search, it lasts for several months, which forces him to sell his home in a down market…and so on and so on. Tracing everything back to a reference check is (probably and hopefully) not realistic, since there are other factors that prospective employers look into. But it’s also true that all else being equal between two candidates, the one with the less favorable reference is likely to get the email that starts with “Thank you for your interest…”, while the one with the good reference is likely to get the email that starts with “We are pleased to inform you…”

What Employers Need to Know

The fact that negative references can be so thorny is why some employers have a strict policy against this kind of feedback. They will confirm facts (start/end dates, job titles, etc.), but that’s it. And frankly, there is some practical wisdom in this approach.

However, some employers do want to avail themselves of the right to share both positive and negative information about a former employee. If your organization is in this camp, then keep the following in mind to mitigate the risk of defamation-related liability:

  • Verify all statements in advance. This is critical, since if a defamation claim is filed, the court will ask for proof that the statements were true.
  • Only authorize specific individuals (or roles) within the organization to provide references. For example, Harry’s boss can’t talk about Harry, but the members of the HR management team can. This will help with compliance and creates a clear, standardized audit trail in case things go sideways down the road.
  • Ensure that the only information that authorized individuals share is necessary and not extraneous. This is important, because there is no guarantee that the person asking the questions (i.e. Harry’s prospective new employer) will make appropriate inquiries. If a defamatory statement is made, employers cannot rely on the defense “well, they asked so I answered — if it wasn’t a valid question, they shouldn’t have asked.”

Learn More

All organizations — whether they provide references or not — must have an employee reference response policy that is monitored, enforced, and in alignment with the labor market best practices and prevailing laws. This is easier said than done; especially since case law in this area is constantly evolving (or devolving, as some of those on the wrong end of a judgment may declare).

To learn more and to ensure that your organization doesn’t suffer blow back from negative references, contact the PIVOTAL team today.

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