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Many businesses have initiated a Job Reference Immunity policy, restricting the nature of information that may be provided about current and former employees to third parties. While it is at times tempting to feel obligated to provide detailed information regarding a former employee’s performance in an effort to help the prospective employer, doing so may expose the company to some liability. Former employees have successfully sued their past employers for libel, slander, defamation, or negligent misrepresentation arising out of job references. Therefore, it is recommend proceeding with caution with job references and verifications in order to reduce the company’s exposure.
A fairly common company policy is to only release information that is completely objective in nature, such as the former employee’s dates of employment and job title. If the prospective employer would like additional information (such as salary information), generally employers require the prospective employer to send a written request for such information that includes the former employee’s written authorization to release the information. Company policies should prohibit the release of information that is subjective in nature.
While the “less is more” approach has been taken by most employers, some recommend taking a more “need to know” approach. The premise behind this approach is that the company’s failure to provide critical information may in fact expose the company to liability. For example, if a current employer gives a reference check with limited information about an employee, and is aware that the employee committed a work-related crime (such as employee theft), a court could argue that the former employer had an obligation to disclose that information. This would apply if the employer was asked specific questions such as, ”Is this employee rehireable?” Or, “Has this employee committed a crime at your work site?” There may be some ethical obligation for a former employer to disclose certain information. For example, if an employer states a former preschool teacher was an excellent employee and never had performance issues, yet chose not to mention this same teacher was convicted of abusing a student, the company may have mislead the inquiring prospective employer. Therefore, the goal is to ensure reference checks are generally neutral; unless extenuating circumstances are present.
Many states have adopted some type of Reference Immunity Laws that ensure employers are protected who opt to provide reference checks. The state laws vary considerably in how they “limit” information to be disclosed by former employers. For example, California limits immunity to the disclosure of “job performance” information to be stated in an objective or subjective manner. Maryland suggests employers acting in good faith may not be held liable for disclosing to a prospective employer any job information about job performance or the reason for the termination of employment. Since there are several states with reference immunity laws, it is recommended to check your state laws or consult with an HR Professional (New York is one of the few states that doesn’t have any statutes specifically regarding references). Remember, if a reference check is conducted on behalf of a federal, state or regulatory authority, employers may not be held liable for any information that is requested/required or provided to the agency. Employers who knowingly disclose information that is false or misleading are not protected under these laws.
It is always a best practice to document employee actions, act in good faith, exercise restraint and always obtain written consent from the applicant. Another tip is to insert a waiver in a departing employee’s severance package releasing the business from all claims based on the voluntary disclosure of information about the employee to a third party. Reference immunity laws essentially protect employers from civil liability if they provide good-faith references or negative truthful information regarding former employees. Therefore, both employers and employees may or may not be in favor of this law.
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