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The Good, the Bad, and the Employee Reference Lawsuit

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By George Khoury, Esq. on July 21, 2017 7:00 AM

When a call comes in requesting an employment reference, employers often say too little out of fear of lawsuits. To make matters worse, gone are the days of writing your worst employee a glowing reference, a la Bartleby, the Scrivener, so you don't have to feel guilty about kicking them to the curb for poor performance.

Believe it or not, providing a good reference for a bad employee can get you sued. Have you heard the one about the company that failed to disclose during a reference check that the employee in question was fired for drug use on the job? That company got sued.

So what's a company to do? Change their policy?

I'd Prefer Not to Give a Reference

Taking a tip from Bartleby, and not his employers, is probably the safer play. If you're asked for a reference, declining to provide one that goes beyond confirming employment dates and title is the only way to avoid the risk of it coming back to haunt you. While there are some statutes that protect reference givers, if the reference is made out of malice, those protections might not provide much protection at all.

Unless you have a good rationale for providing a positive reference, saying anything beyond confirming dates and title can create liability.

The Good, the Bad, and the Settlement

One thing that can often be tricky is when an employment reference check comes in for an employee that had a messy separation. And while it's one thing for a Costanza style-separation, it's an entirely different matter if it resulted in a lawsuit and settlement.

One employer in Arkansas is learning the hard way (through litigation) that loose lips sink ships, and non-neutral references are a bad idea. A former employee had filed a lawsuit that settled. One of the terms of the settlement required the former employer to provide a neutral employment reference. After the settlement, a potential employer called for a reference check, and the former employer provided more than a neutral reference. Now, that employer is being sued because the non-neutral reference is alleged to have cost the applicant the position.

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