Chapter 8 BLACKLISTING IN EMPLOYMENT

• Jurisdiction: North Carolina

8 BLACKLISTING IN EMPLOYMENT

A. Definition

Under section 14-355 of the North Carolina General Statutes, "if any person, agent, company or corporation, after having discharged any employee from his or its service, shall prevent or attempt to prevent, by word or writing of any kind, such discharged employee from obtaining employment with any other person, company or corporation, such person, agent or corporation shall be guilty of a Class 3 misdemeanor . . . ."¹

The statute "must be read in the light of the common law as it existed prior to its enactment, for the purpose of seeing wherein it was deficient, and of discovering the remedy intended to be supplied by the statute."² The North Carolina Supreme Court has said:

Prior to the ratification of the act of 1909, statements as to the character and competency of discharged employees were frequently made voluntarily, and not upon request, and were sometimes prompted by malicious motives, when the motive was difficult of proof; when malice and the loss of service, as the result of the statement, were proven, the damages were difficult of admeasurement; and when there was no loss of employment, but a mere attempt to prevent the employee from obtaining it, no compensatory damages could be awarded.
The act remedies these defects, and under its provisions a statement as to the standing of a discharged employee is not privileged, unless made upon request; and whether privileged or not, if made maliciously, and the employer has thereby prevented or attempted to prevent the discharged employee from obtaining employment, the jury may award penal damages.³

The statute does not attempt to interfere with an employer's right to discharge an employee with or without cause or to prohibit an employer from communicating the nature and character of an employee to potential employers when the facts would be for their interest.⁴

B. Elements

The elements of an action under the statute are:

(1) The defendant was the plaintiff's employer;
(2) The defendant discharged the plaintiff; and
(3) Without solicitation, the defendant by some communication, written or oral, prevented or attempted to prevent the plaintiff from obtaining employment with another employer.⁵
The plaintiff is not required to allege or prove malice or actual damages; both are presumed. The General Assembly of this State evidently thought it just to relieve discharged employees, who were prevented by former employers from obtaining employment . . . by notice of the fact and ground for the discharge, without request, of the burden of proving either malice or actual damages.⁶

C. Elements Defined

1. Defendant was Plaintiff's Employer

The statute is applicable "to all who employ labor."⁷ The plaintiff must specifically allege that he or she was employed by the defendant.⁸

The few reported North Carolina decisions discussing the statutory action do not address the defendant's status as an employer. However, in general, the relationship of employer and employee is created under North Carolina law when the party for whom work is being done retains the right to control and direct the manner in which the details of the work are to be executed.⁹ One who contracts with an independent contractor should arguably not be considered an employer for purposes of the statute. At common law, an independent contractor is defined as one who exercises independent employment and contracts to do work according to his or her own judgment and method without being subject to an employer, except as to the result of the work.¹⁰ Query whether a business partner who also earns a salary from the partnership entity would be an employee of that entity for the purposes of the statute.

New Mexico has a statute similar to that of North Carolina that defines blacklisting as "an employer or his agent preventing or attempting to prevent a former employee from obtaining other employment."¹¹ The New Mexico Supreme Court considered an action by former employees of one corporation against several companies.¹² The plaintiffs were members of a union and they alleged there was a Master Labor Agreement among all the parties that the defendants violated. The plaintiffs specifically alleged that the defendant companies and their agents engaged in blacklisting the plaintiffs in violation of the statute. The court decided that only one of the companies could be classified as an employer as contemplated by the statute because the plaintiffs, after termination, were "former employees" only of that one company.

2. Defendant Discharged Plaintiff

The plaintiff must specifically allege that he or she was discharged by the defendant.¹³ It seems clear that an employee who voluntarily leaves employment may not avail him or herself of the benefits of the statute.¹⁴ However, less clear is application of the statute to an employee who is "constructively discharged."¹⁵ North Carolina does not recognize an independent cause of action for constructive discharge.¹⁶ However, some cases suggest that constructive discharge may be employed to meet an element of another claim.¹⁷ Constructive discharge may be defined as action by an employer that deliberately (i.e., intent) makes working conditions intolerable, thereby forcing an employee to quit.¹⁸

3. Without Solicitation, Defendant Prevents or Attempts to Prevent Plaintiff from Obtaining Employment with Another Employer

The plaintiff has to show the defendant communicated with a prospective employer.¹⁹ Apparently, if the plaintiff's allegations simply track the language of the statute, the complaint will be sufficient to avoid a motion to dismiss.²⁰ The statute can only be violated, if the statements to the prospective employer are unsolicited,²¹ and thus, where the plaintiff admitted the statements at issue came only on inquiry from people the defendant believed to be prospective employers, the statute was inapplicable.²² On the other hand, where the plaintiff alleged he was discharged because, while he was employed by the defendants as a stonecutter, he was a member of an organization of stonecutters that was authorized and maintained under the laws of the State of North Carolina and that, for that reason alone, the defendants refused to deliver stone to anyone in the state who would employ the plaintiff, the plaintiff's complaint stated a cause of action sufficient to withstand demurrer.²³

In an early case,²⁴ the North Carolina Supreme Court opined that under the statute, an employer has the right, on request, to give a truthful statement of the reason for discharge that includes the record of the employee, and if the statement is made in the honest belief that it is true and without malice, the employer is protected.²⁵ However, where a former employer, in addition to giving the record of the plaintiff's employment and the reasons for his or her discharge, said that the plaintiff was suing the defendant in a personal injury action, the court said the statement "could not be a part of the record of the plaintiff while in the employment of the defendant, nor a reason for his discharge, as the suit was instituted after he left the service of the defendant," and it was no answer for the defendant to say that the statement was true since it was not information the defendant was requested to give. It didn't bear on the character or competency of the plaintiff and was "calculated to prejudice him."

D. Defenses

Statements made in response to a request from a prospective employer are privileged under the statute.²⁶ The privilege is not restricted to direct communications between previous and potential employers.²⁷

The federal Fair Credit Reporting Act (FCRA)²⁸ is intended to ensure privacy and accuracy in credit reporting and preempts actions against those who furnish consumer credit information. In a federal action,²⁹ the plaintiff's employer terminated her and then filed a report with a company that provides potential employers with information about persons who have been discharged. The report stated the plaintiff was terminated for "other fraud." The plaintiff brought an action for blacklisting. The federal court decided that since blacklisting is a statutory offense in North Carolina, FCRA preempts claims under the statute against parties acting as furnishers of information to consumer reporting agencies.³⁰ It granted summary judgment to the employer. Since the statute authorizes only penal damages, but not recovery against a municipality, an action against a municipality or its officer acting in his or her official capacity is effectively barred.³¹ The few cases that discuss the blacklisting statute do not address a statute of limitations, but the applicable limitation would appear to be three years.³...