Learn what to tell prospective employers about a former employee.

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.

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.