When an employee leaves your company, it’s a good idea to decide what you plan to say if other employers call you for a reference. If the employee left on good terms, it’s pretty easy, either you and your former employee can agree upon a statement to explain the departure or you can simply tell the prospective employer positive things about the employee. If the employee left under bad circumstances or was fired, however, you face a more difficult task.
Why are employers nervous about giving information on former employees? The California Labor Code makes it a misdemeanor for an employer to make a misrepresentation that prevents a former employee from obtaining employment. Under such circumstances, former employees can sue their ex-employer and recover three times the amount of any actual damages. Employers can be sued if they make a statement which is false or act with reckless disregard for the impact their words have upon the prospective employer.
The good news: California employers are protected by statements based on credible evidence and made without malice. California law specifically states that this protection extends to statements about job performance, qualifications, and eligibility for rehire. Civil Code Section 47(c) protects employers who respond to the question, “Is this person eligible for rehire?” The section states: “This subdivision authorizes a current or former employer, or the employer’s agent, to answer whether or not the employer would rehire a current or former employee.”
Caution on not giving enough information: If you choose to give a reference, you need to know that California case law can find you liable for not providing enough information about an employee. For example, if you give a glowing recommendation about work performance for someone you fired for inappropriate behavior, like sexual misconduct, and don’t mention the misconduct, you could be held liable for not telling the whole story. If the new employer hires your ex-employee and is later involved in a lawsuit, you could be named in that lawsuit.
What about Letters of Recommendation? While many employers think they must give an employee a letter of recommendation, this is definitely not the case. If a good employee leaves your employment under amiable circumstances it is fine to write a letter of recommendation for them, but do not write a letter of false flattery for someone you would not rehire. The California Supreme Court held that an employer writing a letter of recommendation owes the person who receives the letter of recommendation, “a duty not to misrepresent the facts in describing the qualifications and character of a former employee, if making these misrepresentations would present a substantial foreseeable risk of physical injury to the third person.” Id. At 591.
Tips for Creating a Reference Check Policy
Here are some tips to include in your policy to reduce your liability:
• Be consistent. Decide who in your company will be responsible for references. All employees need to direct reference inquiries to that person. Keep a record of all requests for a reference and every response, in case of later trouble. Consider adopting a policy of only providing references in writing, so you have proof of exactly what was said.
• Keep it short and sweet. Adopt a policy of giving out only dates of employment, job title, final salary and information on whether the employee is eligible for rehire. There is quite a bit of influence behind the answer of whether you’d rehire an employee and it allows you to convey valuable information to a potential new employer. Example: I would definitely rehire Kim, she was a tremendous asset to our company. Or, I definitely would not consider Kim eligible for rehire with our company.
• Just the facts. If you still want to share more information, limit your comments to accurate, easily documented information. Example: Kim received three promotions in her time with this company. Or, Kim received several written warnings regarding attendance issues, before her employment with our company was ended.
• Don’t let your emotions get the best of you. If you are still angry about a situation with an ex-employee, don’t allow your emotions to spill over into the reference. Giving your “opinion” about a former employee could open you up to a lawsuit for defamation of character and slander. It is safer and more accurate to say, “Kim failed to follow company policy”, as opposed to “Kim was a horrible employee and she is incompetent.”
• Be truthful. Truth is a defense to almost any claim. However, if there were serious problems with a former employee, you may find yourself in legal trouble if you fail to warn the new employer and these serious problems resurface in the employee’s next job.
• Insist on written releases from employees. This may be difficult, but is probably the best defense. You can require former employees to sign a release—signed authorization that releases their former employer from liability for providing documents to a prospective employer.
Let us help you develop a policy for reference checks that reduces your liability and works for you!
President & CEO