Readers on the Ask A Manager blog asked me quite a few good questions when I volunteered to write a guest post. While we had to select one, I wanted to follow up and answer this great question that I also hear from employees a lot, so I'll answer from both the employee and employer perspective:
References, for an employer to read. So many companies spill nothing except names and numbers. While it’s legal to say anything that reflects an honest assessment of that ee’s work, they won’t for fear of the almighty lawsuit. A refreshing amount of candor from an employment attorney on how many ees actually sue over this issue would be greatly appreciated. Also, some insight on what you can say that will never get you in hot water, or what will get you sued over if you DON’T tell someone.
The truth is that employers can give any truthful information they want about your performance. Defamation is where your employer or former employer makes a false statement of fact about you to someone other than you that damages your reputation.
Some states have statutes protecting employers who give job references to some extent, but even then the employer generally can’t give out knowingly false information. A statement that you were an embezzler, ponzi schemer, or pedophile, made when the person giving the reference knew it was false, will probably not be protected.
A few states actually require employers to provide a letter of reference up on request. What has to be in that letter varies from state to state, but it usually includes job title, dates of employment, salary and/or reason for leaving or termination.
Qualified privilege: Employers have a qualified privilege, that is, one that can be overcome, to conduct an investigation of employee wrongdoing. For instance, if someone complains of age discrimination, the employer’s human resources person, attorney, and the named witnesses can speak about the investigation and will probably be protected. There are some ways to overcome a qualified privilege, so you’ll want to talk to an attorney even if you think the statement was privileged. The problem for employers comes after they conclude that the employee committed wrongdoing. While they may have a privilege to investigate internally, an employer may have liability if the accusation spreads outside the company to potential employers.
Publication: In order to sue for defamation, the information must have been “published” to a third party, which only means that it had to be said to someone other than you. If it gets to a potential employer, it was “published” to a third party. Some states consider statements made inside the company not to have been published to a third person. A statement to you about you will never be defamation unless others were present to hear it.
Absolute privilege: Some communications can never be the subject of a defamation case no matter how knowingly false. These may include statements made in a legal proceeding, statements made to police, to administrative agencies, and by government officials in the scope of their employment. I say “may” because this can vary by state and can be fact-specific. While your employer may be able to say certain things about your performance or alleged misconduct to unemployment, they may not be able to say the same things to potential employers without having some liability.
Opinion: Statements of opinion are not defamation. If the employer simply says that the employee was a poor performer, the statements may well be of opinion, not fact (but if the performance review says the opposite, it may cross over into fact rather than opinion). Statements like, “In my opinion, she was a pedophile,” will not get around the law of defamation.
Truth: Truth is always a defense in a defamation claim. If you stole from the company and your supervisor tells a potential employer that you were fired for stealing, they will probably win a defamation suit. However, the employer will have the burden of proving the truth of the statement, which can be tough. While they may have suspected you, they frequently don’t have enough evidence to convince a jury.
Liability to other employers: An employer who gives false information to a potential employer can be liable if they are damaged by the misinformation. That means telling a potential employer that your thieving employee is honest just to get rid of them will bite you when the employee embezzles from them. If they find out you lied and knew of the employee’s propensity to steal, you could be sued.
Neutral references: This is why many employers have neutral reference policies, where they only give out dates of employment and job title. This is obviously safe information to give. I would caution employers who have neutral reference policies to apply them evenly. If you give positive or negative references to some employees, you could get socked with a discrimination claim.
Reference checking companies: There are professional reference checking companies that pretend to be potential employers and then tell the employee what’s being said about them. Their reports can usually be used as evidence in a defamation case. I’ve also seen employers who were given awful references tell employees what was said and offer to testify. Never assume what you’re saying about a potential employee won’t end up in court.
Agree what will be said: When I negotiate severance agreements, we usually agree what can be said about the employee. Sometimes it’s neutral, sometimes the employer prepares a letter and agrees to give the information from the letter and nothing else. That’s probably a good policy even without an agreement. When an employee is leaving, why not write down exactly what you plan to say in a letter and give it to them? That way they don’t have to worry about what you might say, and you don’t have to worry about getting sued. Just don’t pull a fast one or be cute, like the employer who said, “I need to check the agreement to find out what I’m allowed to say.” No, no, no. That person already said something they weren’t allowed to say. They deserved to be sued for breach of contract.
a. Employees can defame former employers too, so be careful. Corporations can be defamed just the same as individuals. If you have a blog, website, or make statements disparaging the company or their products, you should be careful to get your facts right.
b. Defamation claims against employers can be tough. Many judges just don’t like them. If you sue, you could have an uphill battle. However, that doesn’t mean employers shouldn’t worry. An employee who sues is likely not paying by the hour, but employers defending themselves will end up paying someone’s hourly rate. The cost of defense can be in the tens, or even hundreds, of thousands of dollars, depending on the case.
c. Sometimes a cease and desist letter will accomplish more than a lawsuit. Getting the defamer to stop the statements might be more valuable to you because you can move on and get another job. An employer who gets a cease and desist letter from an employee’s attorney should take it seriously. They already have a lawyer. Assume they mean business and will sue if it continues.
d. If you are thinking about filing a defamation claim against an individual, be careful and make sure the person has assets that will make them collectible. Broke defendants can be frustrating when you try to collect.