Truth or consequences: don't set yourself up for a lawsuit when giving references.

AuthorCurry, Lynne
PositionHR Matters

When you terminated Wayne, he threatened to sue you. To avoid trouble, you gave him a month of severance pay and provided him a bland yet positive letter of reference. If the next employer who hires him finds out Wayne interviews better than he works, could your reference letter backfire on you given you fired Wayne for being sexist?

When Alice quit, you felt glad to be rid of such a toxic employee. Then you receive a call from a prospective employer you consider a friend. You wouldn't wish Katherine on your worst enemy. Should you tell her the truth?

As a supervisor, what risks do you take when you provide negative information on former employees--or don't? Do you incur a risk when you write letters of reference--even positive ones?

HONESTY IS BEST POLICY

According to the American Business Law Association study on defamation suits and plaintiff's awards, managers fearing defamation suits when giving bad references risk little. Few defamation cases make it to trial and the former employee plaintiffs lose 75 percent of these cases. Further, Alaska Statute 965.160 provides good faith protection to employers who give factual, though negative references. Disgruntled former employees have to prove "clear and convincing evidence" of negligence or bad faith on the part of their former employers to win defamation suits.

In contrast, employers provide falsely positive references or fail to give prospective employers negative information about former problem employees take on potential liability for problems their honest disclosure could have prevented.

DISHONESTY BACKFIRES

As an example, a Florida judge ruled Allstate Corp. could be sued for punitive damages for concealing a former employee's potential violence. Allstate management fired an employee for bringing a gun to work yet wrote a recommendation letter stating the employee was let go as part of a corporate restructuring. Fireman's Fund Insurance Co. relied on Allstate's recommendation and hired the former Allstate employee who then shot five coworkers in the Fireman's Fund cafeteria.

In another landmark case, a school vice principal received praise and positive letters of recommendation from three former school districts, despite being involved in sexual misconduct with students at all three...

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