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Bad Employment Reference Leads to Lawsuit

If you fire an employee, it's normally for a good reason. And when a prospective or future employer calls asking regarding a reference for a fired employee, you might feel obligated to be honest. Generally speaking, former employers can't be sued for a negative employment reference so long as they are honest about an employee's employment history and record.

But what happens if you've signed a settlement agreement requiring a fired employee to receive a "neutral employment reference" in the future? And does saying that fired employee was "defiant" count as being neutral? The city of Conway, South Carolina and its fire department may soon find out.

A Defiant Tone

In 2012, Larry Carter was fired by the Conway Fire Department in response to an allegedly anonymous letter sent to the city council accusing him of racism and malfeasance. After some administrative and legal wrangling -- during which Carter's main rival for a promotion within CFD at the time, Le Hendrick, admitted to editing the letter -- the city and department settled with Carter, agreeing to pay him $28,000 and provide a "neutral employment reference."

In 2015, Carter was vying for another promotion, again unsuccessfully, this time in nearby Surfside. According a new lawsuit from Carter, Hendrick violated the agreement by telling Surfside Beach Fire Department Chief Tony Fox that Carter had been "defiant" during his employment in Conway. As reported by the Sun News:

Hendrick admitted in a deposition that Fox had asked if his department had ever had any problems with Carter in the past and that Hendrick told him "there was a history there."
Hendrick sent an email to Fox attaching the conduct policy used, in part, to terminate Carter on Feb. 11, 2015.
Two days later, Hendrick said Fox asked if Carter had ever been defiant in Conway and Hendrick said he had. Later that day, Carter was rejected on the promotion, according to court documents.

Defying a Settlement Agreement

For its part, Conway contends the settlement agreement "did not promise a neutral promotion reference" and an "employment reference does not also cover other inquiries regarding a former employee." Additionally, Fox argues that Hendrick's comments had no effect on his decision not to promote Carter.

With the case heading for trial, it's an important reminder to employers to be careful when discussing a former employee's history with his or her future employers. And that the normal rules concerning bad job references may not apply when there's a settlement agreement in place.

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