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How to Avoid a Lawsuit if I Give a Negative Reference

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I received a surprising phone call this morning from someone that was performing a reference check on one of our former employees. The reason the call surprised me was because this was an employee that we terminated. Now, I am worried that if I tell the truth about how we felt about the employee, our company could be set up for a lawsuit. But if I do not say anything, this company might hold it against us, and we are both in the same industry in a somewhat small community. Do you have any fast advice?

Do not worry; you are not alone in your concerns. And yes, there are a number of things that you can do in order to avoid a lawsuit. Many companies that are in similar situations are also concerned about telling the truth for fear that the former employee will sue for defamation or slander. Therefore, a large number of companies across the country have enacted neutral reference policies for their entire company. A neutral reference policy is basically a policy that states that you will only confirm the name, title and dates of employment for a former employee, but that you will refuse to make any comments about the employee.

If you decide to move forward with a neutral reference policy, then you will need to inform all supervisors and managers in your company that might be called upon to give a reference. The policy should apply to all former employees, even if you would prefer to give a glowing reference for the employee. Therefore, it is important that you are ready to seriously enforce the policy. If you make an exception for one reference check, then you might also be setting yourself up for a lawsuit.

In general, you can be protected from lawsuits in some states. However, because of the threat and frequency of the lawsuits against former employers, many companies do prefer to take on a neutral reference policy, regardless of the state that the company is in.

As a rule of thumb, many courts will be sympathetic to an employer if the information that the former employer gave is accurate and given not out of malice. The information should also only be given to someone on a need-to-know basis, such as a future employer. Furthermore, you will generally be okay if the language that you use to describe a particular behavior is specific and demonstrative of the general behavior that the employee had while with your company.