A Word to the Wise

How real is the fear of a defamation suit based on a bad reference? Well, the number of reported cases is small, suggesting that the fear may greatly exceed the reality. Even beyond the number of cases, it is rare indeed when a plaintiff actually prevails.

This should be no surprise. A defamation plaintiff must clear many hurdles. First, there is the relatively short 1-year statute of limitations. Next, a plaintiff alleging defamation must satisfy special pleading requirements, most notably the requirement that the specific defamatory language be noted. Further, an absolute or qualified privilege may apply, allowing an employer to make a bona fide communication upon which he or she has a legitimate interest or duty and to share that information with someone with a similar interest or duty. For example, a school principal was recently found to be qualifiedly privileged to criticize a guidance counselor's performance. Peters v. Baldwin Union Free School District, 320 F.3d 164, 169 (2d Cir. 2/12/03). In that case, plaintiff argued that the principal did not investigate the truth of the negative comments made and analogized this failure to being fully aware of their falsehood. The qualified privilege would be lost in the latter, but not the former case. The Second Circuit concluded that the principal was well within his qualified privilege to comment about the ability of the guidance counselor to carry out her professional duties. The court found that plaintiff did not carry her burden of showing that the principal was aware of the probability that the statements at issue were false, in which case the privilege would be lost.

Two other defenses to defamation claims loom large. On one hand, truth is an absolute defense to a defamation claim. On the other hand, pure opinion is protected speech. Whether a statement is viewed as fact or opinion “depends on whether a reasonable reader or listener would understand the complained-of assertions as opinion or statement of fact.” Millus v. Newsday, Inc., 89 N.Y.2d 840, 842 (1996) Opinions accompanied by the facts upon which they are based are generally protected. For example, statements about an employee's competence or professionalism, when accompanied by supporting facts, “often have no precise meaning, are not capable of … being objectively characterized as true or false, and are merely a general reflection of the speaker's viewpoint.” Wait v. Beck's North America, Inc., 241 F.Supp.2d 172, 182-84 (N.D.N.Y. 1/14/03).

The fact that employees rarely succeed on defamation claims suggests that counsel's advice of providing only “name, rank and serial number” is working. But it comes at a high cost, namely, the effective communication of performance-related information. Counsel's advice certainly serves to limit disclosure of negative evaluations but, just as certainly, denies some talented, hard-working and deserving former employees the well-earned fruit of their labor — a good job reference. Further, problematic or dangerous employees are able to move from job to job with little risk of being found out.

Are there viable alternatives to “name, rank and serial number?”

Perhaps the simplest and safest alternative is to agree upon a mutually acceptable written reference prior to an employee's departure, together with appropriate release language, that the employer could disclose upon request. Alternatively, the employee could be given the option of authorizing the release of his or her last performance evaluation which would certainly be given weight by most prospective employers as a legitimate business document whose purpose is other than extending a mere courtesy to a former employee. Of course, the employee could authorize the giving of a reference — sight unseen — and release any claims that might result and take his or her chances. Few employers seem willing to permit this option, even if the employee was agreeable.

Management counsel must decide for himself or herself what the appropriate advice is to give to clients with the current legal landscape in mind. Perhaps a realistic assessment of the state of the law will prompt a more nuanced recommendation than “name, rank and serial number.” This advice would take into account the demonstrable fact that a carefully crafted job reference, rooted in truth and opinion based on fact, presents a very limited risk of liability to an employer.

Management counsel has become quite predictable when asked by a client: “Can we give a job reference for a former employee?”

“Thou shalt provide only name, rank, and serial number,” counsel boldly announces. Translated, the employer is being counseled only to provide dates of employment and last position held by the former employee. Occasionally, counsel may go out on a limb and allow his or her client to provide the former employee's last salary or like information, if authorized by the former employee in writing. The assumption here is that it is safer to offer verifiable facts than opinion.

The reason for counsel's caution is, of course, fear of a defamation suit. To disparage one in his or her profession can be defamation per se. Further, there is a prophylactic effect as well of such a rule. If the employer strictly abides by its no job reference rule, then a former employee who does not get a new position applied for will have less cause to suspect that the former employer's actions had something to do with it.

How real is the fear of a defamation suit based on a bad reference? Well, the number of reported cases is small, suggesting that the fear may greatly exceed the reality. Even beyond the number of cases, it is rare indeed when a plaintiff actually prevails.

This should be no surprise. A defamation plaintiff must clear many hurdles. First, there is the relatively short 1-year statute of limitations. Next, a plaintiff alleging defamation must satisfy special pleading requirements, most notably the requirement that the specific defamatory language be noted. Further, an absolute or qualified privilege may apply, allowing an employer to make a bona fide communication upon which he or she has a legitimate interest or duty and to share that information with someone with a similar interest or duty. For example, a school principal was recently found to be qualifiedly privileged to criticize a guidance counselor's performance. Peters v. Baldwin Union Free School District , 320 F.3d 164, 169 (2d Cir. 2/12/03). In that case, plaintiff argued that the principal did not investigate the truth of the negative comments made and analogized this failure to being fully aware of their falsehood. The qualified privilege would be lost in the latter, but not the former case. The Second Circuit concluded that the principal was well within his qualified privilege to comment about the ability of the guidance counselor to carry out her professional duties. The court found that plaintiff did not carry her burden of showing that the principal was aware of the probability that the statements at issue were false, in which case the privilege would be lost.

Two other defenses to defamation claims loom large. On one hand, truth is an absolute defense to a defamation claim. On the other hand, pure opinion is protected speech. Whether a statement is viewed as fact or opinion “depends on whether a reasonable reader or listener would understand the complained-of assertions as opinion or statement of fact.” Millus v. Newsday, Inc. , 89 N.Y.2d 840, 842 (1996) Opinions accompanied by the facts upon which they are based are generally protected. For example, statements about an employee's competence or professionalism, when accompanied by supporting facts, “often have no precise meaning, are not capable of … being objectively characterized as true or false, and are merely a general reflection of the speaker's viewpoint.” Wait v. Beck's North America, Inc. , 241 F.Supp.2d 172, 182-84 (N.D.N.Y. 1/14/03).

The fact that employees rarely succeed on defamation claims suggests that counsel's advice of providing only “name, rank and serial number” is working. But it comes at a high cost, namely, the effective communication of performance-related information. Counsel's advice certainly serves to limit disclosure of negative evaluations but, just as certainly, denies some talented, hard-working and deserving former employees the well-earned fruit of their labor — a good job reference. Further, problematic or dangerous employees are able to move from job to job with little risk of being found out.

Are there viable alternatives to “name, rank and serial number?”

Perhaps the simplest and safest alternative is to agree upon a mutually acceptable written reference prior to an employee's departure, together with appropriate release language, that the employer could disclose upon request. Alternatively, the employee could be given the option of authorizing the release of his or her last performance evaluation which would certainly be given weight by most prospective employers as a legitimate business document whose purpose is other than extending a mere courtesy to a former employee. Of course, the employee could authorize the giving of a reference — sight unseen — and release any claims that might result and take his or her chances. Few employers seem willing to permit this option, even if the employee was agreeable.

Management counsel must decide for himself or herself what the appropriate advice is to give to clients with the current legal landscape in mind. Perhaps a realistic assessment of the state of the law will prompt a more nuanced recommendation than “name, rank and serial number.” This advice would take into account the demonstrable fact that a carefully crafted job reference, rooted in truth and opinion based on fact, presents a very limited risk of liability to an employer.