We terminated an employee a few months ago for poor performance and misconduct. We recently received a phone call from another company that is considering hiring this individual. The company is asking for a reference. What should we tell them? Are we allowed to say why the employee was fired? If we tell the truth and the employee does not get the new job, can he sue us?

To limit exposure to liability, employers must proceed cautiously when providing references to other prospective employers, even if a former employee executes a release. Some companies choose to provide only “neutral” reference information, such as dates of employment and positions held. Other companies may choose to provide more detailed information in an effort to assist other prospective employers with their hiring decisions. Whatever an employer’s decision, its policy should be consistent for all requests to avoid discrimination claims, meaning employers should avoid responding to some reference requests while refusing to respond to others.

If an employer wishes to provide substantive reference information (such as job performance or the reason for termination), keep in mind that, while in some cases the references will be positive, in others they may be negative. If an employer says something about a former employee that results in the individual not obtaining subsequent employment, an employer could be opening itself up to, among other things, liability for a defamation claim. While truth is a defense to a defamation claim, it is always better, of course, to avoid a claim in the first place rather than having to defend one. If an employer chooses to provide substantive reference information, it is a best practice to have local counsel review the employer’s response.

As a final note, there may be some instances in which reference information is required, such as when information is subpoenaed or if a former employee applies for employment with the federal government. In these scenarios, an employer may be legally required to provide additional information.

The Question of the Month is provided by Zywave®, a company wholly independent from Federated Insurance. Federated provides its clients access to this information through the Federated Employment Practices Network with the understanding that neither Federated nor its employees provide legal or employment advice. As such, Federated does not warrant the accuracy, adequacy, or completeness of the information herein. This information may be subject to restrictions and regulation in your state. Consult with your own qualified legal counsel regarding your specific facts and circumstances.