Protect Your Business When Providing Employment References

When a good employee leaves your company, you hope they succeed. Giving them a good job reference is easy. It's difficult for business owners to give marginal workers the same references. More challenging are those for employees you had to fire.

Threats of employee lawsuits already hang over employee terminations. What can small business owners do to protect themselves against possible defamation suits over references?

Of course, nothing can prevent someone from suing if they want to. You can minimize your risks and give good workers the extra boost they need. This article discusses ways to protect yourself and provide references if you're asked for them.

General Employment References

In a standard employment reference, a potential employer wants to know the following:

• If a prospective employee worked at the company
• If they were there for the time stated
• If they had the job title they listed on their resume

To avoid legal issues, that is all the information many employers will give.

Employers can find themselves in a difficult spot if they know an employee is a poor worker and fail to tell prospective employers about known issues. Negligent referrals exist when a former employer knows of existing problems and fails to tell future employers about them.

For instance, if you fired an employee for sexual harassment, you must inform any future employers about that fact. Following state laws about disclosure helps protect you from legal action.

Firing Employees and Wrongful Termination

Firing employees is unpleasant for everyone. If your small business has a human resources department, they should handle the actual termination process. If not, you should outline your disciplinary and termination policies in an employee handbook.

The safest course for employers is ensuring that they fire an employee in good faith. Forget what you thought you knew about at-will employment. If you have well-documented grounds for termination, you eliminate most wrongful termination employment lawsuits.

Terminated employees shouldn't expect positive references. Employees must know that when a new employer asks why they left their last job, someone will check to verify their references. No federal laws restrict employment references, but some state laws limit what you can and cannot say.

If you're not sure how to handle an employee termination, an employment law attorney can help you understand the employment laws in your state.

What You Can Say in a Job Reference

Your reference should stick to the facts. There are a few professional situations where employers can give their opinions, but in general, a boss's opinion of a worker is irrelevant.

Depending on your state and city regulations, there are some things employers can say when asked about a former employee:

• Duration and dates of employment
• Starting and ending wages
• Eligibility for rehire

You may be allowed to state:

• Reasons for termination or separation
• Job performance
• Job knowledge, skills, qualifications, or abilities

Some states restrict who may receive the information or what industries can request or deliver the information. For instance, Massachusetts limits these requests to the healthcare industry.

What You Can't Say in a Job Reference

There are some things you cannot tell a potential employer when giving an employment reference. As noted, opinions should never be part of a reference. Other things you should not mention include:

• Anything that violates the employee's privacy, such as sexual orientation, marital status, or political affiliation. All violate the law.
• Any information related to their status in a protected class. Race, religion, gender, or national origin should not be part of your reference.
• False information, gossip, or comments from co-workers. All statements should be job-related.

If you believe your employee may be a potential risk to other employers, contact an employment law attorney to discuss your options. Negligent references and their flip side, negligent hiring, are receiving increasing scrutiny at a time when workplace violence is on the rise. Giving no reference may not relieve an employer of liability.

Avoiding Defamation Lawsuits

Defamation, at its core, is an untruthful statement intended to damage the victim's reputation. In an employment defamation claim, a former employee claims their prior employer made a false claim intending to prevent them from getting a new job.

The best defense to defamation is the truth. Like other torts, the burden is on the plaintiff (in this case, the employee) to prove you made false statements on purpose or gave negative information unrelated to the employee's job performance.

If a new employer calls you for a reference check, keep these tips in mind:

• Only give references to authorized personnel: In some states, only a prospective employer may receive information. Protect yourself by confirming you're giving details to the right person.
• Be honest and straightforward: Tell the truth, and don't be unclear or misleading. If you fired an employee for showing up drunk and driving a forklift into a wall, don't say it was poor job performance. The prospective employer needs to know the whole truth. However, you cannot say, "The employee had a drinking problem," since that was not the issue.
• Be objective: Avoid sounding petty or vindictive.
• Don't give extraneous information: Answer all questions, but don't volunteer any information that wasn't asked for. Never provide details about the employee's personal life or other facts you may have uncovered.

In some situations, you may ask an employee for a signed release relieving you of liability if you give a negative reference. For instance, you may tell the employee who drove the forklift that you will have to disclose that information if asked and have them sign a liability waiver if you do.

These types of releases often have limited use and are not guaranteed protection against a defamation case. Discuss releases and waivers with an employment law attorney before taking such action with an employee.

Concerned About Being an Employment Reference? Talk to an Attorney

If a former employee uses you as a reference, knowing what you can and can't say is important. Talk to an employment law attorney in your area to protect yourself and avoid liability for saying the wrong thing.