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How to Navigate Reference Requests for Former Employees

Legal Update 2016, Vol 1

The seemingly simple question of whether organizations should provide references for former employees has created an unusual amount of anxiety and frustration for employers. To understand why this issue is so vexing for employers and what they should do in response to requests for references concerning former employees, some historical perspective is warranted.

The “Good Old” Days

Until relatively recently, the issue of employee references created little concern for most employers. Employers generally adopted one of two approaches – (i) refuse to provide a substantive reference for any employee (other than information concerning the position held, dates of employment, and occasionally the last salary earned) or (ii) provide references for all employees without conditions.

The rationale was rather simple – employers either did not want to be bothered with references or they assumed that if they were contacted for a reference, it was done at the behest of a former employee, and therefore, they could be candid in discussing the strengths and weaknesses of the former employee.

However, as the economy waned and employees failed to obtain the jobs they believed they would secure, they (often with lawyers in tow) began to explore the reasons why job offers were not forthcoming. Increasingly, this led to accusations by former employees that their former employers had either defamed them or otherwise wrongfully interfered with their ability to secure new employment. To be sure, there may have been an instance where an employer acted maliciously in an effort to damage an employee in their efforts to find new employment.

In most instances, though, employers were providing factual opinions that were not necessarily as flattering as the former employees expected. Legislative Efforts to Encourage References In an effort to encourage former employers to provide candid references, legislatures across the country began passing legislation that granted a “qualified privilege” for employers. In Maryland, for example, a statutory presumption was created that a reference provided by a former employer is presumptively made in good faith unless the employee can demonstrate otherwise.

The Maryland statute provides:

(1) An employer acting in good faith may not be held liable for disclosing any information about the job performance or the reason for termination of employment of an employee or former employee of the employer:

(a) To a prospective employer of the employee or former employee at the request of the prospective employer, the employee, or former employee; or
(b) If requested or required by a federal, state, or industry regulatory authority or if the information is disclosed in a report, filing, or other document required by law, rule, order, or regulation of the regulatory authority.

(2) An employer who discloses information shall be presumed to be acting in good faith unless it is shown by clear and convincing evidence that the employer:

(a) Acted with actual malice toward the employee or former employee; or
(b) Intentionally or recklessly disclosed false information about the employee or former employee.

Problem solved, correct? Not quite. Although newly created statutory presumptions are helpful to employers in defending claims of defamation and improper interference, they have not prevented these types of claims. Employers continue to face the prospect of lost time and money (as well as legal exposure) in defending claims made by former employees even though the statutory presumption of good faith is generally beneficial to former employers in defending these claims.

Employer Options

What should an employer do about providing a reference for former employees?

First, an employer can adopt a straightforward policy of providing prospective employers with only basic information, i.e., the position(s) held, dates of employment, and the last salary earned. In this scenario, employers could inform prospective employers that they should not draw any negative implications from the provision of this summary information because it is being done for all references.

Second, the employer can require as a condition for providing a reference that an employee sign a reference release form, which specifically authorizes the employer to speak candidly about the individual and releases the employer from any harm in doing so.

Third, the employer can provide references and attach conditions to the provision of such references. For example, the employer can adopt a rule that only the human resources manager can provide references and limit the kind of information to be provided in the reference.

An employer’s choice of options depends on its risk tolerance and company culture. In this rapidly evolving area of the law, employers should be cautious and deliberate regarding their policy on providing employee references.

Please see below for a list and downloadable PDF of best practices for handling reference requests from former employees.

Marc Engel is an employment attorney and litigator at Lerch, Early & Brewer who regularly counsels clients on how to comply with state and federal employment statutes and wage hour laws. For more information on successful strategies for managing employees and preventing employment claims, contact Marc at (301) 657-0184 or mrengel@lerchearly.com. Michael Neary, who also is an employment attorney and litigator at Lerch Early, assisted with this article.
 


 

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This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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