Other Risks in Providing References

April 13, 2006

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The main risk an employer faces in providing employment references is being sued for defamation. Discussed below are additional claims that may arise from unfavorable employment references. These potential claims should give you further incentive to limit any job references to true and objective facts that are relevant to a former employee's job-performance abilities.

Invasion of privacy claims. Employers who disclose information about an employee's personal life open the door to being sued for invasion of privacy. In an invasion of privacy claim, employers can be held liable even if the information they disclosed is true, because truth is not a defense as it is in a defamation claim. Accordingly, you should refrain from disclosing information about an employee's financial affairs or marital problems or other private facts unless you are absolutely certain that the disclosure will serve legitimate business purposes. If you feel compelled to disclose private facts, you can limit your potential liability by securing in advance the employee's consent to the disclosure.
Equal employment opportunity claims. Employers who refuse to provide references or who provide unjustifiably negative references for former employees have been sued on the basis that their actions damage the employees' equal employment opportunities guaranteed by federal or state fair employment laws. Although such laws on their face generally protect specified classes of "employees" from discrimination, courts have been willing to extend their protection to former employees as well.
Interference with prospective employment claims. In several states, a former employee can sue an employer who gives false information to prospective employers with the intention of interfering with the former employee's prospects for employment. This type of claim is similar to, and may be filed in conjunction with, a defamation claim. It differs slightly from defamation in that it focuses primarily on the employer's intent in providing the unfavorable reference.
Blacklisting claims. In a majority of the states, an employer's "blacklisting" of a former employee is a crime. Traditionally, blacklisting laws have been applied to prevent employers from providing bad job references in retaliation for a former employee's participation in union or other protected labor activity. However, the laws generally are broad enough to cover any communications that are designed to prevent former employees from securing employment. Most blacklisting laws specifically permit employers to supply letters of recommendation or service as long as the information provided is neither false nor defamatory.