Available Upon Request? Qualified Immunity for Employer References

Although the primary impetus for the practice of 'neutral' employment references has been concern over potential liability, the law in many states has evolved to greatly reduce such legal risks. Most states' laws now protect employer references by granting employers qualified immunity from defamation liability when providing an assessment of an employee's performance, as long as that reference is given in good faith. Thirty-nine states now have such employer reference immunity statutes, and six more have case law extending the privilege to former employers. Such laws should, in theory, open the door for firms to share information about prospective employees in good faith and without fear of liability.

Common Law

Case law protecting employers who provide references in good faith dates at least to 1967, when the Massachusetts Supreme Court found a qualified privilege from defamation applied to a job reference which questioned an employee's integrity and suggested the employee misappropriated classified material from the files of the Massachusetts Institute of Technology. The court held, '[w]hether the statements to the assumed employer were true or false is immaterial if there was no abuse of the privilege and there was no showing of actual malice.' Burns v. Barry, 228 N.E.2d 728, 731 (Mass. 1967).

A number of states followed in finding qualified privilege from defamation liability for employer references made in good faith. The common thread in all of these holdings was the requirement that a plaintiff show lack of good faith by the employer in providing information about the employee's performance, although the requirements for a breach of this 'good faith' standard varied among court decisions. Some decisions require a showing of malice to overcome the privilege, or negligence in failing to ascertain the truthfulness of the reference information, or a showing that the employer had no reasonable ground for believing the reference information was true. See, Burns, supra.; Jacron Sales Co., Inc. v. Sindorf, 350 A.2d 688, 697-98 (Md. 1976) (applying a negligence standard as set forth in Restatement (Second) of Torts '580B); Butler v. Folger Coffee Co., 524 So.2d 205, 207 (La. App. 1988).

As a growing number of courts recognized the privilege, legal commentators, as well as interest groups such as the National Federation of Independent Business and the Society for Human Resource Management called for the codification of the doctrine in statute. A growing list of state legislatures responded by adopting statutes granting qualified immunity to employer references, thus solidifying and clarifying the protections available to employers.

Statutes

Starting with Florida in 1991, 39 states have codified the privilege in employment reference immunity statutes. The states that have adopted such statutes as of the writing of this article are: Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Montana, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. These statutes grant immunity from civil liability to an employer who discloses information about an employee in good faith. Generally, the legislative schemes announce a presumption of good faith on behalf of the employer, and require that a plaintiff who brings a claim of defamation against a disclosing employer must rebut this presumption in order to prevail.

As in those states with common law regimes, the presumption of good faith can be rebutted in a variety of ways, depending on the statute. In many states, if the employer provides information known to be false at the time of disclosure, or in negligent or reckless disregard of that information's truth, the employer's immunity may be overcome. Additionally, several states consider bad intent by the employer ' Maryland, Texas, and California, among others, provide exceptions to immunity where the employer acts with malice. Several states provide that references that violate civil rights or anti-discrimination employment statutes are not privileged, if it can be shown that the disclosure was made in a manner that was discriminatory based on race, religion, sex, national origin, or age. Some states also revoke immunity for employers that disclose confidential information in references. For instance, the Nevada statute contains a provision revoking immunity where the employer makes a disclosure in violation of a confidentiality agreement, while Georgia provides an immunity exception for information considered confidential by federal, state, or local law. Nev. Rev. Stat. Ann. '41.755(3)(f) (2007); O.C.G.A. '34-1-4(b) (2007).

States Without Established Protection

A small number of states have not expressly applied the qualified privilege to employers who give references, either by case law or by statute. Mississippi, Nebraska, New Hampshire, New York, and Vermont, as well as the District of Columbia, have neither statutes nor established common law protection for good faith employee references. Although courts in these jurisdictions have generally recognized that qualified immunity from defamation claims exists in certain cases, they have not affirmatively held that a qualified privilege exists for employers in the specific context of employment references. For instance, New York courts recognize qualified immunity where the communicating parties share a common interest, such as in cases of sharing employee evaluations between supervisors in a company, but have yet to hold that this includes communications regarding employer references. See Kasachkoff v. City of New York, 107 A.D.2d 130, 134, aff'd 68 N.Y.2d 654 (N.Y. App. Div. 1985). Similarly, courts in the District of Columbia grant a qualified privilege to communications made by a party who has a duty to the other party or who shares an interest with that party, but those courts have not yet held that this description fits the circumstances of employer reference communications. See Crowley v. North American Telecommunications Ass'n, 691 A.2d 1169, 1173 (D.C. 1997).

Is Silence Still the Best Policy?

Given the protections from liability available in many jurisdictions, most legal employers have a good deal more flexibility than they currently exercise in handling requests for references. Yet, many cautious employers have been slow to liberalize their reference practices. See Markita D. Cooper, Job Reference Immunity Statutes: Prevalent but Irrelevant, 11 Cornell J. L. & Pub. Pol'y 1, 44-46 (2001) (noting anecdotal evidence that employer reference practices have been slow to change).

There are several possible reasons for continued reluctance to provide detailed references. As noted, several important jurisdictions, including New York and the District of Columbia, have not yet enacted employer reference immunity statutes and lack clearly enunciated common law on the subject. Other possibilities include worries over the administrative costs of providing lengthy references, caution regarding violating the good faith standard for immunity, fear of frivolous lawsuits, or even a lack of awareness of recent changes in the law. Or perhaps, in the end, employers are simply adhering to the old maxim: If you can't say something nice, don't say anything at all.

Charles Floyd is a litigation associate in the Dallas office of Gibson, Dunn & Crutcher, LLP.

At some point, virtually every legal employer will be asked to provide a reference for a former employee. As departed associates, former summer clerks, and office staff move through the employment world, their prospective employers will often make contact with former managers or supervisors, in the hope of gaining information about the potential hire. These requests can present a dilemma for the reference provider, particularly in those cases where the candidate's performance during his or her employment was less than stellar. In those circumstances, the former employer faces competing considerations: Should one risk the repercussions of arguably damaging the former employee's reputation, or, out of an abundance of caution, fail to provide relevant information to a fellow employer?

The standard advice for employers faced with this dilemma historically has been to say very little of substance about former employees in order to minimize the risk of potential liability. For better or for worse, that approach also allows the former employee considerable flexibility in characterizing the reasons for his or her job movement. Following that approach, the vast majority of law firms have adopted neutral reference, or 'name, rank, and serial number' policies. An employer response under such a policy provides a confirmation that the employee worked at the firm for a specific time period in specific capacities, but declines to comment on the quality of work by the prospective hire, his or her job performance, or the circumstances surrounding his or her departure. This 'say nothing' regime, while avoiding liability for firms, has the negative consequence of restricting the flow of information in the employment market. Candid information about an employee's performance and qualifications, both positive and negative, is unavailable to a prospective employer. Thus, excellent candidates may lose the benefit of what would otherwise be strongly positive references, while the limitations of poor candidates may not be fully conveyed to the market.

The artificial constraint of information available to the labor market creates more than merely theoretical economic inefficiencies for law firms and those they employ. Many firms incur high transaction costs to recruit and hire lateral talent, but the long-term success rates of such hires can be relatively low. More transparency in the reference process could help firms do a better job of selecting candidates who are a good fit with the positions they are attempting to fill. At the same time, better fit is more likely to lead to stability and long-term success for the individual candidate. Particularly within close legal communities where qualified staff and attorneys move among a relatively small number of firms, each firm has an interest in hiring those who best fit its culture and profile. The open availability of hiring references serves this interest, making hiring in a given legal market more efficient.

Although the primary impetus for the practice of 'neutral' employment references has been concern over potential liability, the law in many states has evolved to greatly reduce such legal risks. Most states' laws now protect employer references by granting employers qualified immunity from defamation liability when providing an assessment of an employee's performance, as long as that reference is given in good faith. Thirty-nine states now have such employer reference immunity statutes, and six more have case law extending the privilege to former employers. Such laws should, in theory, open the door for firms to share information about prospective employees in good faith and without fear of liability.

Common Law

Case law protecting employers who provide references in good faith dates at least to 1967, when the Massachusetts Supreme Court found a qualified privilege from defamation applied to a job reference which questioned an employee's integrity and suggested the employee misappropriated classified material from the files of the Massachusetts Institute of Technology. The court held, '[w]hether the statements to the assumed employer were true or false is immaterial if there was no abuse of the privilege and there was no showing of actual malice.' Burns v. Barry , 228 N.E.2d 728, 731 (Mass. 1967).

A number of states followed in finding qualified privilege from defamation liability for employer references made in good faith. The common thread in all of these holdings was the requirement that a plaintiff show lack of good faith by the employer in providing information about the employee's performance, although the requirements for a breach of this 'good faith' standard varied among court decisions. Some decisions require a showing of malice to overcome the privilege, or negligence in failing to ascertain the truthfulness of the reference information, or a showing that the employer had no reasonable ground for believing the reference information was true. See, Burns, supra.; Jacron Sales Co., Inc. v. Sindorf , 350 A.2d 688, 697-98 (Md. 1976) (applying a negligence standard as set forth in Restatement (Second) of Torts '580B); Butler v. Folger Coffee Co. , 524 So.2d 205, 207 (La. App. 1988).

As a growing number of courts recognized the privilege, legal commentators, as well as interest groups such as the National Federation of Independent Business and the Society for Human Resource Management called for the codification of the doctrine in statute. A growing list of state legislatures responded by adopting statutes granting qualified immunity to employer references, thus solidifying and clarifying the protections available to employers.

Statutes

Starting with Florida in 1991, 39 states have codified the privilege in employment reference immunity statutes. The states that have adopted such statutes as of the writing of this article are: Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Montana, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. These statutes grant immunity from civil liability to an employer who discloses information about an employee in good faith. Generally, the legislative schemes announce a presumption of good faith on behalf of the employer, and require that a plaintiff who brings a claim of defamation against a disclosing employer must rebut this presumption in order to prevail.

As in those states with common law regimes, the presumption of good faith can be rebutted in a variety of ways, depending on the statute. In many states, if the employer provides information known to be false at the time of disclosure, or in negligent or reckless disregard of that information's truth, the employer's immunity may be overcome. Additionally, several states consider bad intent by the employer ' Maryland, Texas, and California, among others, provide exceptions to immunity where the employer acts with malice. Several states provide that references that violate civil rights or anti-discrimination employment statutes are not privileged, if it can be shown that the disclosure was made in a manner that was discriminatory based on race, religion, sex, national origin, or age. Some states also revoke immunity for employers that disclose confidential information in references. For instance, the Nevada statute contains a provision revoking immunity where the employer makes a disclosure in violation of a confidentiality agreement, while Georgia provides an immunity exception for information considered confidential by federal, state, or local law. Nev. Rev. Stat. Ann. '41.755(3)(f) (2007); O.C.G.A. '34-1-4(b) (2007).

States Without Established Protection

A small number of states have not expressly applied the qualified privilege to employers who give references, either by case law or by statute. Mississippi, Nebraska, New Hampshire, New York, and Vermont, as well as the District of Columbia, have neither statutes nor established common law protection for good faith employee references. Although courts in these jurisdictions have generally recognized that qualified immunity from defamation claims exists in certain cases, they have not affirmatively held that a qualified privilege exists for employers in the specific context of employment references. For instance, New York courts recognize qualified immunity where the communicating parties share a common interest, such as in cases of sharing employee evaluations between supervisors in a company, but have yet to hold that this includes communications regarding employer references. See Kasachkoff v. City of New York , 107 A.D.2d 130, 134, aff'd 68 N.Y.2d 654 (N.Y. App. Div. 1985). Similarly, courts in the District of Columbia grant a qualified privilege to communications made by a party who has a duty to the other party or who shares an interest with that party, but those courts have not yet held that this description fits the circumstances of employer reference communications. See Crowley v. North American Telecommunications Ass'n , 691 A.2d 1169, 1173 (D.C. 1997).

Is Silence Still the Best Policy?

Given the protections from liability available in many jurisdictions, most legal employers have a good deal more flexibility than they currently exercise in handling requests for references. Yet, many cautious employers have been slow to liberalize their reference practices. See Markita D. Cooper, Job Reference Immunity Statutes: Prevalent but Irrelevant, 11 Cornell J. L. & Pub. Pol'y 1, 44-46 (2001) (noting anecdotal evidence that employer reference practices have been slow to change).

There are several possible reasons for continued reluctance to provide detailed references. As noted, several important jurisdictions, including New York and the District of Columbia, have not yet enacted employer reference immunity statutes and lack clearly enunciated common law on the subject. Other possibilities include worries over the administrative costs of providing lengthy references, caution regarding violating the good faith standard for immunity, fear of frivolous lawsuits, or even a lack of awareness of recent changes in the law. Or perhaps, in the end, employers are simply adhering to the old maxim: If you can't say something nice, don't say anything at all.

Charles Floyd is a litigation associate in the Dallas office of Gibson, Dunn & Crutcher, LLP.