When making representations about former employees to others, all communications should be truthful and in good faith.
Verify The Source of The Referral Request and The Reason for It
Clients should make sure the people they give a reference to have legitimate business reasons to request the information. If requests are received by telephone, legitimacy may be difficult to determine. Clients should consider instituting a policy that replies will be made only to written reference requests. Callers should be informed of this policy and given an address where they can send reference requests.
Information obtained from the applicant's references, such as that obtained from an application or interviews, should be kept confidential. This information should be shared only with people directly involved in the hiring process. If responses to reference requests contain defamatory statements, restricted access will help avoid a claim of unreasonable publication.
Limit The Number of People Who Can Make a Statement on The Employer's Behalf
Employers should limit the individuals in the company who may give employment references. For example, information-giving could be limited to a human resources officer or direct supervisor who would only provide information documented in the employee's records.
Be Consistent with The Reason for The Separation
Employers' statements must be consistent with the justification given to the former employee at the time of termination. Employers should not inform a prospective employer that the former employee's departure was for a reason different than the reason given to the employee at termination.
Back Up Allegations of Misconduct with Evidence
Employers should avoid accusations that an employee engaged in illegal or improper conduct. Employers have been found liable for defamation for making statements to the effect that a former employee was a thief, used illegal drugs, or made improper advances toward coworkers. If an employer fired an employee because it suspected the former employee was engaged in illegal or improper conduct and the employer feels compelled to state that reason for the termination, then the statement should be restricted to the suspicion with an explicit caveat that the reason was a suspicion. (For example, "Employee was fired because he was suspected of taking company property," not "Employee was fired because he stole company property."). However, the employer should not state a suspicion unless it can be supported with objective evidence.
Avoid Exaggeration or Embellishment
Employers should avoid exaggerating an employee's misconduct. For example, a statement that an employee was fired for gross insubordination may be defamatory when the alleged misconduct was the refusal to adjust an expense account.
The employer should obtain a release from the employees for whom it provides references. If an employee leaves the company, the employer should bring up the issue of future references. Clients should not tell employees that references will not be given unless they sign the release, however, because doing so could invalidate the release if employees do sign it. The employer should speak with the employee about what information will be communicated to prospective employers if the employee elects to sign a release. The employee should be informed that, if he or she does not sign the release, information given to prospective employers will be kept to a bare minimum.
Consider Whether There Is a Need to Warn a Prospective Employer of Foreseeable Harm
If the employer has reason to believe a former employee represents a foreseeable risk to a prospective employer or the prospective employer's employees (such a violence, dishonesty, sexual harassment, etc.), then it may be wise for the employer to consider making those concerns known to a prospective employer upon an inquiry by the prospective employer.
Additional resources provided by the author
Wisconsin Lawyer, April 2008; Wisconsin Statute Sections 111.321, 111.322, 895.487