Shawn Smith

Article Summary:

How to handle employment references without getting sued.

Useful Employment References in a Litigious World

In an age of increasing employee lawsuits, it is easy to understand why many employers are reluctant to provide references for former employees. When companies give "negative" references, they run the risk of exposure to defamation, invasion of privacy, or discrimination lawsuits by former employees. When employers give false "positive" references, the new employer may claim that it was harmed by the failure to provide truthful information, especially in situations in which the employee was terminated due to fraud or violent behavior. As a result, many organizations adopt policies confining reference information to position held and dates of employment.

A neutral, "name, rank and serial number" reference policy, however, is not always the best solution. This policy may not shield employers from liability if they fail to disclose the violent tendencies of an ex-employee. In addition, by refusing to pass along even positive information, companies may unfairly penalize employees who were good performers. When organizations overly restrict the exchange of employee information, they prevent the collection of appropriate information that may properly bear on critical hiring decisions. Ironically, the party that benefits most from this lack of communication is the poor or marginal performer.

Should employers endeavor to provide performance-related information about former employees? Increasingly, state courts are recognizing that companies have a legitimate interest in exchanging appropriate employee information, and are adopting legal protections for employers who opt to disclose details about an individual's work. These protections apply so long as employers provide information that is job related, based upon reasonable evidence and without malice. Although the decision concerning a reference policy is entirely up to the employer, organizations that choose to provide more comprehensive references can minimize legal risk by following the steps below:

  • Obtain a release form
    Provide a release form for employees to sign upon leaving the organization, releasing the employer from any liability for responding truthfully to any questions asked during the course of giving references. Tell departing employees that without a signed release, the organization will provide "neutral" references only, and that the individual must sign and return the document if he or she wants prospective employers to receive more comprehensive information.

  • Establish a point of contact
    Assign a point of contact in the organization responsible for handling all reference inquiries. Instruct employees not to provide any information, but to direct all reference calls or letters to this individual. Make sure the individual designated as the point of contact is properly trained as to the organization's reference policy, as well as the "dos and don'ts" of providing reference information.

  • Provide only accurate and verifiable information
    An employee cannot win a defamation suit unless the reference provides intentionally false information. Provide only honest opinions, express opinions as opinions rather than statements of fact and do not respond with malice. Limit the information given to the employee's job-related performance. Do not divulge gossip, or information that might invade the former employee's privacy, such as information about an individual's medical condition, political beliefs or religious practices. Do not provide unsolicited information; address only the specific questions asked.

  • Give references to proper parties only
    Verify the identity of the person requesting the reference, that the person is an appropriate individual to be receiving the information and that the former employee knows that his or her references are being checked. If in doubt about the identity of the person requesting the reference, ask for the request in writing. Do not give out any information to parties that do not have a legitimate "need to know."

Shawn Smith is a consultant, speaker, attorney and the founder of Next Level Consulting, LLC, an organizational development and management consulting firm. She has worked with a broad range of public, private and non-profit organizations to develop practical programs and strategies to navigate change, increase individual and organizational effectiveness and exceed business objectives. Shawn is the co-author of The HR Answer Book: An Indispensable Guide for Managers and Human Resources Professionals (AMACOM 2004). Contact her for more information through her web site at

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