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Legal Clinic

Best Practices in Reference Checking

While it is conventional wisdom that only name, title and dates of employment should be given in reference checks, that is not the case. Most states offer employers a "qualified privilege" to provide references regardless of how negative they may be -- but that won't protect an employer who provides misleading or false information about a former employee.

Monday, January 9, 2012
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QUESTION: Can you explain what information is illegal or inappropriate to provide when HR receives a reference call about a former employee? What is the best practice about what to say and what not to say in general?

ANSWER: The following are some best practices you can implement when responding to a reference call:

Make sure the requester is either the former employee or believed in good faith to be a representative of the prospective employer;

Provide only the name, dates of employment, job title and department (never disclose medical records or other records that may violate an employee's civil rights);

Disclose truthfully if you do provide more information (i.e., do not provide glowing recommendations for someone terminated for theft, but also do not tell a prospective employer that the individual was dishonest if he was simply fired for a disagreement with his manager);

Stick to objective data and information about a former employee, such as "John had a 90 percent attendance rate," as opposed to "Mike was a supervisory nightmare;"

Require former employees, upon their discharge, to sign an authorization form before releasing their information, which can reduce the risks of a potential claim;

Refer all reference calls to HR and advise them to make all disclosures in writing (or only permit a supervisor to speak on his or her own behalf and not on the company's or on company letterhead); and

Perhaps most importantly, consistently apply whatever policy is adopted, so no former employee can claim discrimination or retaliation.

Angry former employees are quite litigious and have sued their old bosses for tort claims, such as defamation (for giving false information to a prospective employer); breach of contract (see Giannecchini v. Hospital of St. Raphael, 47 Conn. Supp. 148 (Super. Ct. 2000) (for violating a termination agreement that stipulated all references in the employee's personnel file for involuntary termination would be removed)); discrimination (for providing negative information in violation of an employee's civil rights); and retaliation (see Szymanski v. County of Cook, 468 F.3d 1027 (7th Cir. 2006) (for providing negative information against a former employee who filed previous lawsuits against the former employer)).

While the law generally favors employers when defending these types of suits, you may simply prefer to avoid the costs, aggravation and negative publicity of litigation and provide only the bare minimum upon receipt of a reference call, such as the former employee's name, dates of employment, job title and department.

If you decide to more substantively respond, you could face liability for providing untruthful or misleading positive responses.

Consider the following scenario: As the HR director of a private school, you receive a reference call from a school in another state, asking about your school's former principal. The principal was fired last year due to alleged sexual misconduct with a few students. Instead of providing the vanilla answer or accurately mentioning the reasons for his discharge, you speak glowingly about the former principal, concealing any facts related to the allegations.

In this situation, you, as the former employer, can be held liable for fraud or misrepresentation. In fact, a California court found additional liability for physical harm to a student molested by the former employee at the hiring school. See Randi W. v. Livingston Union School District, 50 Cal. App. 4th 447 (Cal. App. 5th Dist. 1995).

You may also be subject to liability for providing negative reviews of a former employee, most commonly in a defamation suit.

Defamation is commonly defined as an injury to the reputation or good name of another that tends to bring that person into disrepute. To satisfy the elements of defamation, there must be: (a) a false and defamatory statement concerning another; (b) an unprivileged publication of that statement to a third party (i.e., other than the plaintiff); (c) fault amounting to at least negligence on the part of the publisher; and (d) injury to the plaintiff as a result of the publication. Restatement (Second) of Torts § 558.

Truth is a defense to a claim of defamation, but only when the underlying implication of the statement is true, not merely when the statement is verbally accurate. See Lewis v. Equitable Life Assurance Soc. of the United States, 389 N.W.2d 876 (Minn. 1986).

Courts have also recognized "substantial truth" as a defense to a defamation claim. See Wayne v. Genesis Medical Center, 140 F.3d 1145 (8th Cir. 1998) (the test is whether plaintiff would have been exposed to any more harsh criticism or censure had the publication been free of error).

However, a statement that is substantially true, but incomplete and, therefore, misleading can also be defamatory. See O'Brien v. Papa Gino's of America, Inc., 780 F.2d 1067 (1st Cir. 1986) (statement that former employee was terminated for drug use when there were other retaliatory motives, such as a personal grudge with a supervisor, was defamatory).

Most states offer employers a "qualified privilege" to provide references regardless of how negative they may be. This "qualified privilege" stems from the public interest in encouraging full and fair statements by an individual who has a legal or moral obligation to provide information about someone.

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As such, courts will not hold employers liable for providing a negative reference unless the employer knowingly and recklessly provided false information; acted out of "malice" (see Norwood v. City of New York, 203 A.D.2d 147 (1st Dep't 1994)); or issued the negative information "excessively", i.e., to individuals that the employer should reasonably know are not entitled to receive it, such as other co-workers. See Schrimsher v. Liberty Nat'l Life Ins. Co., 655 So.2d 986 (Ala. 1995).

There is an exception to a defamation claim, known as the "authorization exception," where the plaintiff consented to the publication, i.e., "authorized, procured or invited" it. This encourages employers to have discharged employees sign forms authorizing disclosure of their work performance to prospective employers.

Lastly, it is vital to consult with the particular laws in your state before implementing a policy, as obligations and protections vary from state to state.

Over 30 states have adopted reference-check immunity or job-reference shield laws.

For example, in Florida, an employer is immune from civil liability unless it is shown by "clear and convincing evidence" that the information disclosed was "knowingly false or violated any civil right of the former or current employee". See Fla. Stat. § 768.095.

In Arkansas, however, the employer must have received a signed consent authorizing such disclosure from the employee. See Ark. Code. Ann. § 11-3-202, 11-3-204.

California provides additional protection for an employer to answer whether or not the employer would rehire a current or former employee. See Cal. Civil Code § 47.

Some states do not have such protective statutes, including Massachusetts, New Jersey, New York and West Virginia; however, the common law "qualified privilege" to a defamation claim still applies.

Thirty-six states have anti-blacklisting statutes, which prohibit employers from preparing, using or circulating a list of persons designated for special avoidance, antagonism or hostility, including California, New York and Florida.

In California and Florida, violations of the statute are misdemeanors and in New York, it is an unfair labor practice. See Cal. Lab. Code §§ 1050, 1053; Fla. Stat. Ann. §§ 448.045; N.Y. Exec. Law § 296(13), N.Y. Lab. Law § 704.

Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.

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