Business Law 101 / Hiring/Firing Practices-References

By Albert L. Kelley

There is a standard hiring practice among many employers to request information from an applicant’s previous employers before hiring.  This practice creates a great deal of risk for the prior employer.

Many employers try to soothe the pain of firing an employee by telling them they will receive a good job reference in the future.  Such a blanket statement is bad policy.First, it opens the door to liability if the employer fails to give the employee a good reference because the court could find that the employee gave up rights based on this promise and therefore the employer is in breach of this agreement.  Second, if the “good reference” is false, it creates even more liability if the information is something the future employer needs to know.

Often many companies have a policy to only release the most basic information, such as limiting job references to dates of employment, job title and salary.  The concern is that to give more detailed information may create the risk of defamation suits from the employee.

Just as there is a risk if the employer gives too much information, there is an equal risk if the employer doesn’t give enough information.  Former employers have faced lawsuits for giving incomplete references that, as a result, are misleading.  In one case, a former employer was sued after he allegedly sent an incomplete referral letter that neglected to mention that the former employee had been fired for bringing a gun to work.  The employee was subsequently hired by an insurance company and went on a rampage, killing three and wounding two of his co-workers, before killing himself.

In another example, the California Supreme Court held that school district officials could be liable for negligent misrepresentation and fraud for a letter of recommendation in which they unreservedly recommended an employee who had been previously accused of sexual misconduct.  The former employee was hired as the principal of a middle school and later a student alleged that the principal molested her in his office.  It was discovered that the employee had a history of disciplinary action for alleged sexual harassment and improper contacts with female students, yet he received a series of positive recommendations as he moved through a series of new jobs.

Even if the reason for discharge is given truthfully, the vagueness can open an employer to liability.  In a suit between a doctor and a hospital, the doctor claimed that the hospital told a prospective employer that the doctor had been terminated “for cause” without any further explanation.  The court felt that such a statement could have implied that the doctor was not competent which was potentially defamatory.

Finally, the employer must be careful that what he writes in the reference is based on fact and not opinion.  A Texas appellate court affirmed a jury’s award of $1.9 million to a former employee whose employer referred to the employee as a “zero” and a “classical sociopath” who was “lacking in compuncture [sic] or scruples.”

To best protect themselves, an employer should provide complete and truthful information to a prospective employer.  Any negative issues should be presented factually, and the prior employer should maintain documentation that will support the statements put forth.

            Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University.  He is also the author of “Basics of Business Law” and “Basics of Florida’s Small Claims Court” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice.  If you have any questions about legal issues, you should confer with a licensed Florida attorney.

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