Giving & Getting Employment References

To prove defamation against an employer giving a negative reference, the employee must show:

• The employer made a false and defamatory statement about the employee;
  
• The employer's publication of the communication was not privileged;
  
• The employer was negligent or otherwise at fault in publishing the information; and
  
• The employee was harmed by the publication.

Employers who monitor giving references can go beyond name, rank and serial number while avoiding the risk of defamation claims.

The Conditional Privilege

Most defamation actions against employers fail on the second step. Employers have a conditional privilege to reveal defamatory information about employees and former employees. This privilege attaches only when the employer's publication of the defamatory information helps a legitimate business interest. An employer has a conditional privilege to reveal information that may turn out not to be true concerning an employee when the publication is reasonably necessary to serve the employer's legitimate interest in the fitness of an employee to do his or her job, like letters of reference or evaluation.

Employers revealing negative information to prospective employers should limit the scope of the information they provide. Employers also should limit publication of that information to those individuals with a similar and legitimate interest in the information, and should not publish the defamatory information to disinterested parties.

Because the privilege was established to promote communication between employers related to an employee's character and capabilities, most communications between current or prior employers and prospective employers are privileged. Actions in defamation will not succeed. As a practical matter, prospective employers should be able to rely on references from prior employers to make hiring decisions. Transmission of information about the character and ability of former employees happens under the umbrella of a conditional privilege when done with proper safeguards.

The privilege protects an employer's statements of opinion, facts, and other statements the employer reasonably believes to be true. When an employer relies on the conditional privilege as a defense, the truth of the remark is immaterial. The truth of the statements made, however, is relevant when the plaintiff seeks to destroy the conditional privilege by showing that the defendant abused the privilege or acted with malice.

Courts apply the privilege only when both the publisher and the recipient of the information have a common interest in the information and the publication of the information furthers that interest. If the publisher and the recipient do not share a common interest in the information, a court may find the employer's publication of the information to be excessive or unnecessary. Id. That finding destroys the employer's privilege defense because the privilege does not protect an employer who excessively or unnecessarily publishes defamatory information regarding an employee.

Employers who abuse the conditional privilege lose it. An employer who publishes a defamatory statement knowing it is false or with reckless disregard for its truth can be liable for defamation and will not be protected by the conditional privilege. To decide whether to apply the conditional privilege, courts carefully scrutinize the motive of the employer publishing the defamatory information. If the employer abused the privilege by resorting to it as a pretense for publishing a defamatory statement, the court will not apply the privilege.

Courts also do not apply the conditional privilege when an employer acts maliciously in revealing defamatory information about a current or former employee. In this context, malice means that the defamatory words, although spoken on a privileged occasion, were not spoken pursuant to the right and duty which created the privilege but were spoken out of some base ulterior motive.

Although the law of defamation and the definition of privilege can be confusing and technical, common sense allows employers to offer reference information with minimum risk. For further protection, employers may wish to request a release from the former employee prior to giving a reference.

Employer Liability for Incompetent or Dangerous Employees

Failing to obtain adequate background information about an employee can create liability for negligent hiring or retention. Negligent hiring requires employers to exercise reasonably prudent care to obtain an employee capable of doing the job for which the employee is hired. Negligent retention requires employers to use reasonable care in retaining only competent employees. If the employee must possess specific skills for the job he or she was hired to do, the employer can be liable for negligence if it hires an employee lacking the requisite qualifications. The plaintiff suing on a negligent hiring theory must prove that the defendant knew or should have known that:

• Hiring an employee without specific qualifications foreseeably presented a risk of harm to third persons;
  
• The employer knew or should have known the employee it hired lacked these necessary qualifications or otherwise presented a risk to third parties; and
  
• The employer's negligence in hiring the employee caused the injury.

Due Diligence In Hiring

To win a negligent hiring case the plaintiff must prove the hirer knew, or in the exercise of ordinary care should have known, that the employee was incompetent, violent, dangerous or criminal. To avoid this liability employers must conduct, or at least make a good faith attempt to conduct, reviews of prospective employees' past employment records before hiring, because the employer may be liable for hiring an employee whose incompetence or dangerousness would have been revealed to an employer who had performed a reasonable investigation. Whether an employer has exercised reasonable care is generally a jury question. If the jury finds that the employer knew or should have known of the employee's incompetency or dangerousness, and that these traits of the employee harmed third parties, the employer will be liable to injured third parties.

The plaintiff must also prove that the employer could have foreseen the injury to the third party. For example, an employer who knows of a employee's drinking problem and violent behavior may be liable to business invitees assaulted or battered by that employee. Although foreseeability does not require that the particular consequence have been anticipated, the plaintiff may hold the employer liable if some harm is a foreseeable consequence of the employee's conduct. For example, a court held an employer liable for hiring an employee with a drinking problem and violent tendencies to work in a bar.

Finally, a plaintiff will prevail in a negligent hiring or negligent retention case only when the employer places the employee in position to harm third persons and the employer's placement of the employee in a position to do damage causes the injuries.

Massachusetts, along with most other New England states, has recognized the torts of negligent hiring and retention. Our Supreme Judicial Court has held that a hospital could be liable for continuing the staff privileges of a doctor that it knew or ought to have known had sexually assaulted a female patient in the past. However, the fact that an employee has a criminal record does not in itself establish a negligent retention. If, however, the employer has knowledge of the criminal record, it has a duty to investigate.

Employers can protect themselves from liability for negligently hiring an employee by performing routine background and reference checks on prospective employees. The scope of the pre-employment investigation should match the degree of opportunity of prospective employees to hurt third parties. The greater the risk of harm, the higher the degree of care necessary to constitute ordinary care.

In one case, the plaintiff recovered on grounds of negligent hiring because one of the defendant's employees was responsible for plaintiff's loss of gold valued over $200,000. The court noted that the defendant was offering a service the very essence of which required honest, trustworthy, and reliable personnel. The sensitive nature of the employment, coupled with the opportunity and the temptations led to the conclusion that a prudent employer should rely on more than the absence of specific evidence or statements that a potential employee is dishonest or criminally inclined. A reasonable investigation would call for affirmative statements attesting to an applicant's honesty, trustworthiness, and reliability and perhaps also require the disclosure of the basis upon which the recommending person has relied. Realizing that job applicants generally provide references who are certain to produce favorable reports, background checks in these circumstances should seek relevant information that might not otherwise be uncovered. When an employee is hired for a sensitive occupation, mere lack of negative evidence may not be sufficient to discharge the obligation of reasonable care.

Although employers should try more advanced background checks before hiring prospective employees who present greater risks to third parties, employers have not been held liable for failing to discover information that could not have been discovered by a reasonable investigation. Nonetheless, an employer has a higher duty of reasonable care when he or she knows the employee will gain the authority or the tools to harm third persons in ways he or she would have been unable to harm them absent employment by the employer.

Negligent Hiring Versus Negligent Retention

Negligent hiring differs from negligent retention. To prove a case of negligent hiring, the plaintiff must demonstrate that when the employer hired the employee, the employer knew or should have known of the employee's dangerous nature. To prove a case of negligent retention, the plaintiff must prove that during the course of the employee's employment by the employer, the employer became aware, or should have become aware, of problems with the employee.

Lawful Reference Checks

Negligent hiring and negligent retention are complicated by the limits imposed on employers in conducting preemployment inquiries. Several statutes restrict the scope of inquiry and employers must be careful to balance their need for information against the limits posed by various discrimination statutes.

Can An Employer Be Liable For Giving A Bad Employee A Good Reference?

Although the question has not been decided in New England, courts eventually may recognize a cause of action against a prior employer who provides a falsely favorable reference. For example, what if the employer gives a good reference for a departing employee found to have engaged in sexual harassment? Or the employee who threatened his supervisor with bodily harm?

Legal action by third parties against employers who did not report the negative characteristics of prior employees would be based on traditional negligence and would require proving that:

• The prior employer owed a duty to the prospective employer or third party;
  
• The prior employer breached that duty by failing to disclose to the prospective employer negative information about the employee; and
  
• The breach of that duty injured the third party or prospective employer.

Although courts conceivably could find that the social obligation to disclose information about a former employee creates a legal duty between the prior and prospective employer, Massachusetts' courts have not addressed this issue.

If Massachusetts courts find or create a duty between prior and prospective employers or between prior employers and third parties, a plaintiff suing would have to prove that failing to provide an accurate reference foreseeably caused his or her injury. That showing would require the plaintiff-employer to establish that he or she would not have hired the employee if the prior employer had disclosed the negative information.

The plaintiff also would have to establish that someone with knowledge of the employee's negative characteristics could have foreseen the injury caused by the employee.

A recent decision by the California Supreme Court may be an indication that the law in this area is ready to change. In the case officials at three public schools completed a detailed job reference form sent to them by a college placement office seeking information about a school administrator who previously had worked at each of the three schools. The college placement office then supplied the completed reference forms to other public schools where he was seeking employment. Each of the three school officials recommended the candidate for future employment and listed his favorable qualities, such as having "outstanding rapport" with students and being "an upbeat, enthusiastic administrator."

The three school officials had failed to reveal that he had been the subject of parent complaints and student accusations of sexual harassment, improper touching and sexual remarks to female students. Because of the recommendations, he was hired as a vice principal at a school where he "offensively touched, molested, and engaged in sexual touching of a 13-year- old." The girl's parents sued the three school officials who furnished the favorable references and their school district employers. The parents brought several claims, including negligent reference, negligent misrepresentation and fraud.

The lower court dismissed the case, but the California Supreme Court reversed. It held that the writer of a letter of recommendation owes a duty to prospective employers and third parties not to misrepresent the facts when describing the qualifications and character of a former employee if making such misrepresentations would present a substantial and foreseeable risk of physical injury to the prospective employer or third parties. The court held that no duty of care exists without a resulting physical injury or a special relationship between the parties. This decision was not based on a special statute, but on the common law of fraud and misrepresentation that prevails in nearly all 50 states.

Fair Credit Reporting Act ("FCRA") Consumer Reports And Investigative Consumer Reports

One tool frequently overlooked as reference checking devices are consumer reports and investigative consumer reports under the FCRA. Overlooking this tool can become evidence of negligent hiring or retention if an employee harms a third party and a plaintiff is able to show that using these FRCA tools is common enough among employers hiring people for the position the employee was in.

Consumer Reports

A consumer report is a report including information concerning an individual's credit worthiness, general reputation and personal characteristics. These reports generally include objective information, such as criminal, motor vehicle, and credit histories.

Under the FCRA, before getting a consumer report on a current or prospective employee, an employer must disclose its intent to get the report to the individual. The disclosure must be clear and conspicuous, and it must appear on a separate sheet of paper. The employer must also obtain the individual's permission to obtain the report in writing. The authorization and disclosure may be combined, but no other information should be included on the form.

Before obtaining the report, employers also must make certifications to the consumer reporting agency providing the report. The employer must certify that it:

• Has provided a "clear and conspicuous" disclosure to the subject of the report;
  
• Has received written permission from the subject to obtain the report;
  
• Will not use the information obtained in violation of any federal or state equal employment opportunity law or regulation; and
  
• Will follow the requisite steps if an adverse action is taken against the subject on the basis of the report.

If an employer does decide to take adverse action against an individual based at least in part on the report, it must first provide that individual with a copy of the report and a description of his or her rights under the FCRA, including the right to be informed of actions taken by any entity that uses the report adversely to the subject, to know what is in the report and who has requested the report, to dispute incorrect information in the report either with the reporting agency or with the source of the information, and to have inaccurate information corrected or deleted. The subject of the report also has the right to know that information older than seven years generally cannot be reported, access to the information is limited to those with a permissible purpose, the subject's consent is required for the release of reports containing medical information, the subject may delete his name from lists for credit and insurance offers, and the subject may seek damages for violations of the FCRA in federal or state courts.

When an employer takes adverse action against any individual due to the report, the employer also must tell the individual of its action, orally, electronically, or in writing. It must provide the individual with the name, address, and phone number of the agency that provided the report, state that the agency did not make the decision to take the adverse action, and that the agency has no knowledge of the specific reasons as to why the action was taken. The employer must notify the individual of his or her right to obtain a free copy of the report from the agency if requested within 60 days of receiving notice of the adverse action, and to dispute the accuracy of the report with the providing agency.

Investigative Consumer Reports

An investigative consumer report is a special kind of consumer report that includes subjective information about an individual's character, reputation, and credit-worthiness, obtained through personal interviews with associates, neighbors, or friends of the individual. The FCRA imposes additional obligations on employers wishing to use investigative consumer reports.

The employer must disclose to the employee or prospective employee that it may obtain such a report. This disclosure must be mailed or delivered to the subject within three days after the report is requested. The disclosure also must state that the subject has the right to request from the employer, within a reasonable time after receiving the employer's notice, a complete, written description of the nature and scope of the requested investigation. The employer must provide this disclosure no later than five days after either receiving the request from the employee or requesting the report, whichever is later. In addition, before obtaining the report, the employer must provide the reporting agency with a statement that these disclosures have been made.

Employers using consumer reports and investigative consumer reports must keep in mind that the use of either type of report may be challenged as discriminatory if they have an adverse impact on a particular protected group.

Conclusion

Although Massachusetts courts have not imposed upon employers a legal obligation to provide complete evaluations of an employee's job-related traits, courts have tried to encourage candid discussions of an employee's qualifications by establishing a conditional privilege. Because this privilege limits the information an employer can disclose and the publication of that information, employers should ensure that the person to whom they disclose that information has a legitimate interest in the information, and they should confine their discussions to an employee's ability to perform in the proposed position. Furthermore, employers should make reasonable efforts to ensure that the information they disclose is accurate. Personnel files should be reviewed before communicating a substantive reference. The reference-giving employer should also centralize this responsibility so that only trained people give references.

In looking for references on prospective employees, employers should ensure that a reasonable effort, consistent with applicable law, has been made to check references. Defending a claim based on negligent hiring requires showing that the employer made every lawful effort to verify references even if the inquiry produced no information.