Employee References

In an effort to walk the thin line between these two claims, many employers have implemented a “name, rank, and serial number” reference policy, only confirming a former employee's title, salary, and duration of employment. Although this may at first seem to be a foolproof approach, a problem arises when an outstanding former employee requests a positive reference. Former employers should be mindful that, by offering a neutral reference for one employee and a glowing reference for another, it may be exposing itself to liability. Therefore, the employee terminated for chronic absenteeism may receive a reference virtually indistinguishable from the employee terminated as the result of downsizing. Unfortunately, justified reticence by employers to make exceptions to their reference policy may cause outstanding candidates to lose employment opportunities, as many potential employers simply refuse to hire candidates for whom they are unable to obtain a detailed reference.

This dilemma is particularly relevant in the current economic climate, when large numbers of qualified, hard-working employees are being laid off for purely financial reasons. With the pool of available jobs continually shrinking and employers themselves struggling to make ends meet, references carry significant weight. Employers may wonder if there is any way to assist valued former employees in finding new employment without inadvertently exposing themselves to liability and what information is appropriate to reveal. This article offers a few suggestions to assist employers with these very timely concerns.

Establishing a Reference Policy

Employers that have not already done so should establish a uniform reference policy. The policy should explicitly state all exceptions that will be made to the general policy. As explained above, the safest policy for the employer is to reveal only the employee's dates of employment, position, and salary. However, if an employer is able to establish some form of internal due diligence, accurately recording both employee achievements and misconduct, it may also choose to reveal these neutral facts to potential employers. Employers should, however, avoid responding to reference questions with subjective opinions and speculation, which cannot be supported with documentation. Saying as little as possible is generally the best policy. Liability is almost always premised on misrepresentation rather than mere non-disclosure.

Centralizing Responses to Reference Requests

In order to ensure consistent implementation of this neutral reference policy, all reference requests should be centralized through Human Resources. In the event that individual supervisors are contacted with reference requests, they should direct all inquiries to a designated HR representative. Supervising employees should be instructed not to respond personally to reference requests under any circumstances.

Providing References for Downsized Employees

If an employer is forced to downsize, it may wish to consider an exception to its neutral reference policy in order to assist laid-off former employees. However, it is crucial that this exception, like the policy itself, be uniformly implemented. If one or more of the laid-off employees are below-average workers, uniform implementation may present a challenge. It is probably safest for the employer to draft a form letter to be individualized for each laid-off employee, which states that the reason for termination was downsizing. Providing a reference in written form rather than responding to telephone inquiries will allow the employer to customize each letter carefully with objective facts and ensure that these facts are supported by documentation.

Similarly, when dealing with reference letters drafted in response to a severance agreement, the employer may be asked to include certain wording. Before drafting the reference letter, employers should carefully check to confirm that the requested wording does not conflict with documented, objective facts.

Employee Waivers

The employer may receive telephone calls from prospective employers that have obtained a signed waiver stating that the former employee will not bring a defamation claim against the former employer regardless of information released. Referencing employers should understand that such waivers allow, but do not compel, revelation of additional information. If the employer's reference policy dictates compliance with waivers, the employer should still proceed with caution, requesting a copy of the waiver before releasing any information and, again, ensuring that information revealed is supported by documentation.

Some employers have attempted to reduce their liability prospectively by asking departing employees to sign a waiver. Although the possession of such a waiver may furnish limited protection, a prospective waiver obtained by a former employer is less likely to be effective than a current waiver obtained by a prospective employer.

Additionally, it should be noted that at least 26 states have passed employer immunity statutes. These statutes encourage accurate references by offering legal protection to employers who give good-faith references, even in the absence of an employee-signed waiver. Employers should review their respective state laws to determine whether an immunity statute is applicable and the extent of protection afforded.

Responding to the Most Common Reference Question

One of the most common questions asked by prospective employers is whether a former employer would rehire a particular employee. If this question is avoided only when the answer is negative, potential employers will quickly catch on to the implication. Employers may wish to consider a uniform response to this question, either stating that an answer would violate company policy (if that is true), or responding with objective facts. (i.e., “The employee consistently received excellent marks on her reviews.” Or “Unfortunately, the employee's position no longer exists at this company.”) Though such responses may feel uncomfortable, especially if the prospective employer points out that their question has been dodged, this is the safest way of avoiding liability.

Providing References for Employees Who Have Engaged in Physical Harassment

There may be times when an employer feels an obligation to reveal negative information about a former employee. This feeling may be valid if the former employer is asked for a reference regarding an employee who engaged in physical harassment or violence at work. Although the case law varies slightly by state, an employer is generally only required to reveal this information in the presence of foreseeable physical harm to the potential employer or the community. Regardless of whether the employer perceives this risk, a referencing employer with doubts as to a particular employee should consult with an attorney before proceeding.

Conclusion

Bearing all of the above suggestions in mind, referencing employers should not feel overly responsible for the fate of former employees. In this age of information technology, electronic search engines and social networking sites may prove to be a more valuable resource than a referencing employer when considering a job candidate. Evidence of both achievement and misconduct are often readily available to prospective employers on the internet. Because prospective employers are all too aware of the legal restraints placed on referencing employers (after all, today's prospective employer is tomorrow's referencing employer), the real research is often performed independently of reference calls. In many cases, inquiring with a former employer is a mere formality.

Ashley Eddy and Ralph Morris, a member of the newsletter's Board of Editors, are both labor and employment attorneys in the Chicago office of Schiff Hardin LLP. They were assisted by Malinda Lee, a third year student at Washington University Law School who was a summer associate at their firm.

When asked to provide a reference for a former employee, employers may feel that they are trapped in a no-win situation. They understand that prospective employers are trying to shield themselves from negligent hiring claims by engaging in the “due diligence” of checking with former employers. However, providing details about a less-than-stellar former employee's shortcomings is rarely the best course of action.

An employer that negligently makes a statement about a former employee that turns out to be false or misleading may leave itself vulnerable to a defamation claim brought by the former employee. On the other hand, side-stepping a former employee's misconduct by “accentuating the positive” might leave the referencing employer equally vulnerable should the misconduct be repeated, as the new employer could sue the referencing employer for negligent misrepresentation.

'Name, Rank and Serial Number'

In an effort to walk the thin line between these two claims, many employers have implemented a “name, rank, and serial number” reference policy, only confirming a former employee's title, salary, and duration of employment. Although this may at first seem to be a foolproof approach, a problem arises when an outstanding former employee requests a positive reference. Former employers should be mindful that, by offering a neutral reference for one employee and a glowing reference for another, it may be exposing itself to liability. Therefore, the employee terminated for chronic absenteeism may receive a reference virtually indistinguishable from the employee terminated as the result of downsizing. Unfortunately, justified reticence by employers to make exceptions to their reference policy may cause outstanding candidates to lose employment opportunities, as many potential employers simply refuse to hire candidates for whom they are unable to obtain a detailed reference.

This dilemma is particularly relevant in the current economic climate, when large numbers of qualified, hard-working employees are being laid off for purely financial reasons. With the pool of available jobs continually shrinking and employers themselves struggling to make ends meet, references carry significant weight. Employers may wonder if there is any way to assist valued former employees in finding new employment without inadvertently exposing themselves to liability and what information is appropriate to reveal. This article offers a few suggestions to assist employers with these very timely concerns.

Establishing a Reference Policy

Employers that have not already done so should establish a uniform reference policy. The policy should explicitly state all exceptions that will be made to the general policy. As explained above, the safest policy for the employer is to reveal only the employee's dates of employment, position, and salary. However, if an employer is able to establish some form of internal due diligence, accurately recording both employee achievements and misconduct, it may also choose to reveal these neutral facts to potential employers. Employers should, however, avoid responding to reference questions with subjective opinions and speculation, which cannot be supported with documentation. Saying as little as possible is generally the best policy. Liability is almost always premised on misrepresentation rather than mere non-disclosure.

Centralizing Responses to Reference Requests

In order to ensure consistent implementation of this neutral reference policy, all reference requests should be centralized through Human Resources. In the event that individual supervisors are contacted with reference requests, they should direct all inquiries to a designated HR representative. Supervising employees should be instructed not to respond personally to reference requests under any circumstances.

Providing References for Downsized Employees

If an employer is forced to downsize, it may wish to consider an exception to its neutral reference policy in order to assist laid-off former employees. However, it is crucial that this exception, like the policy itself, be uniformly implemented. If one or more of the laid-off employees are below-average workers, uniform implementation may present a challenge. It is probably safest for the employer to draft a form letter to be individualized for each laid-off employee, which states that the reason for termination was downsizing. Providing a reference in written form rather than responding to telephone inquiries will allow the employer to customize each letter carefully with objective facts and ensure that these facts are supported by documentation.

Similarly, when dealing with reference letters drafted in response to a severance agreement, the employer may be asked to include certain wording. Before drafting the reference letter, employers should carefully check to confirm that the requested wording does not conflict with documented, objective facts.

Employee Waivers

The employer may receive telephone calls from prospective employers that have obtained a signed waiver stating that the former employee will not bring a defamation claim against the former employer regardless of information released. Referencing employers should understand that such waivers allow, but do not compel, revelation of additional information. If the employer's reference policy dictates compliance with waivers, the employer should still proceed with caution, requesting a copy of the waiver before releasing any information and, again, ensuring that information revealed is supported by documentation.

Some employers have attempted to reduce their liability prospectively by asking departing employees to sign a waiver. Although the possession of such a waiver may furnish limited protection, a prospective waiver obtained by a former employer is less likely to be effective than a current waiver obtained by a prospective employer.

Additionally, it should be noted that at least 26 states have passed employer immunity statutes. These statutes encourage accurate references by offering legal protection to employers who give good-faith references, even in the absence of an employee-signed waiver. Employers should review their respective state laws to determine whether an immunity statute is applicable and the extent of protection afforded.

Responding to the Most Common Reference Question

One of the most common questions asked by prospective employers is whether a former employer would rehire a particular employee. If this question is avoided only when the answer is negative, potential employers will quickly catch on to the implication. Employers may wish to consider a uniform response to this question, either stating that an answer would violate company policy (if that is true), or responding with objective facts. (i.e., “The employee consistently received excellent marks on her reviews.” Or “Unfortunately, the employee's position no longer exists at this company.”) Though such responses may feel uncomfortable, especially if the prospective employer points out that their question has been dodged, this is the safest way of avoiding liability.

Providing References for Employees Who Have Engaged in Physical Harassment

There may be times when an employer feels an obligation to reveal negative information about a former employee. This feeling may be valid if the former employer is asked for a reference regarding an employee who engaged in physical harassment or violence at work. Although the case law varies slightly by state, an employer is generally only required to reveal this information in the presence of foreseeable physical harm to the potential employer or the community. Regardless of whether the employer perceives this risk, a referencing employer with doubts as to a particular employee should consult with an attorney before proceeding.

Conclusion

Bearing all of the above suggestions in mind, referencing employers should not feel overly responsible for the fate of former employees. In this age of information technology, electronic search engines and social networking sites may prove to be a more valuable resource than a referencing employer when considering a job candidate. Evidence of both achievement and misconduct are often readily available to prospective employers on the internet. Because prospective employers are all too aware of the legal restraints placed on referencing employers (after all, today's prospective employer is tomorrow's referencing employer), the real research is often performed independently of reference calls. In many cases, inquiring with a former employer is a mere formality.

Ashley Eddy and Ralph Morris, a member of the newsletter's Board of Editors, are both labor and employment attorneys in the Chicago office of Schiff Hardin LLP. They were assisted by Malinda Lee, a third year student at Washington University Law School who was a summer associate at their firm.