When it Comes to Giving References, Just Stick to the Facts!
Whenever one of your employees leaves, you typically will have to decide what to say to potential employers who call for a reference. The decision is pretty straight forward if the employee left on good terms: you can come up with a mutually agreeable statement to explain the departure together, or you can simply tell the whole glowing truth to any prospective employer who calls for a reference. But, if the employee was fired, you face a more difficult task.
Let's face it – most reasons for firing an employee look bad. And sometimes an employer cannot prove what he or she strongly believes to be true – that an employee is stealing from the company, is incompetent, or lied about job qualifications, for example.
When a potential employer calls for a reference, you may feel trapped between wanting to tell the truth and fearing a lawsuit if you say anything unflattering. Unfortunately, this fear is not unfounded. Plenty of defamation lawsuits have been filed over negative references. And, even if your former employee can't successfully prove that you defamed him or her, you will have to spend precious time and money fighting the allegation.
My suggestion is when it comes to giving references, just stick to the facts! And for further guidance (not legal of course – we are HR professionals, not attorneys), here are 7 things you should know about job references.
1. Reference-checking firm Allison & Taylor estimates that 50% of its reference checks come back negative or lukewarm.
2. Not one single federal law exists limiting what employers can say in references. I know you think you're sure about this law existing. You probably heard it from a friend or on TV. There is no such law.
3. No state prohibits employers from giving out truthful information about an employee's job performance. I'm not aware of a single state law (correct me if I'm wrong!) saying that employers can only give out dates of employment and job title. Discussing job performance is allowed.
4. Most states don't require employers to give out any reference at all. While some states require employers to give out specific limited information, most require nothing at all from former employers. Employees who have to undergo background checks may be disqualified from a job just because a former employer refused to speak. This can also be a problem if former employees need to apply for unemployment or public assistance.
5. Some states require employers to give former employees a letter with specific information (varies from state to state). These states are California, Delaware, Indiana, Kansas, Maine, Michigan, Minnesota, Montana, Nebraska, Nevada, Texas, and Washington. You can check out each state's requirements here.
6. Most states give employers some immunity from slander and libel suits. Each state's immunity is a little different, but employers in most states get a lot of leeway in what they can say about former employees.
7. Truth is always a defense to a slander or libel suit. Even in states without immunity, if you give out truthful information, your employees (current and former) won't be able to sue for slander or libel. Truth is a perfectly acceptable defense. However, if you make false statements of fact (note: this is not the same as opinion), such as falsely saying your former employee stole money or didn't meet quota, then he or she might have a defamation case against you.
On a completely separate, but related note – when an employee leaves, it can be challenging to figure out what to tell the rest of your staff – especially if it was on less than positive terms. Another suggestion – keep it short and don't go into detail. Make a brief statement to your workforce saying that the employee is no longer with the company. Tell them who will handle the tasks that person was responsible for, and ask them to direct any questions to you.