Handle References with Caution

Date: 2007
Author: Daniel A. Lublin
Publication: Metro

Employment references are a catch 22 for employers

Picture this scenario: a former employee requests a letter of reference.  His next job is contingent upon it being positive.  He may have been well liked, but his performance left much to be desired.  Commenting positively, without mentioning the problems he created, is simply not candid.  But alluding to the quality of his work will damage his prospects.  And, while invaluable to the departed employee, the reference you give is just as important for his prospective employer, who will rely on it in deciding which candidate should be offered a position.
Employees are not legally entitled to an employment reference – even one confirming the terms of their employment.  In spite of this, employers should beware, as the following claims have crept into Canadian lawsuits:
Bad faith dismissal: refusing to provide an employee with a reference can lead to a finding that the employer was acting in bad faith, in a wrongful dismissal claim.  I currently have a number of such cases.  If the employee can establish that the time that it took her to find replacement employment was lengthened as a result of an employer’s refusal to provide a positive written or oral reference, the judge may award damages to that employee in excess of the value of the claim.
Defamation: a former employer can be sued for libel or slander by a terminated employee as a result of a reference.  But not so fast: such claims are notoriously difficult to prove.  Even if a former boss provides information that is untrue and damaging to the employee, neither that boss, nor his employer, may be liable, as there is a legal defence protecting them where those comments were honestly made, however incorrectly.  The only restriction is if the employee can demonstrate that the comments were maliciously made, or in other words, the person making the statements knew they were untrue, which can be practically impossible to prove.
Negligent referencing: an employer can be held responsible for the acts of a former employee, if it omitted to provide or misstated information that should have been obvious.  If the employer has issued a sparkling reference that fails to mention that the employee had been fired for serious misconduct, it may be negligent if that employee is hired as a result of the positive reference and then repeats his crime.
Negligent hiring: occurs where an employer is held accountable for the acts of an employee against other employees and customers, if it had failed to properly check the reference.  If that employee harms others and information suggesting that could happen was available, the employer can be sued for negligence.
In light of the concerns, I recommend that employers consider the following guidelines:

  1. Offer departing employees reasonable references outlining more than simply the start date, position and reporting relationship.  Comment on objectively positive results, such as awards or accomplishments, particularly in situations where the employee’s performance was not an issue.
  2. Designate a trained representative to furnish all references and have him or her respond to any oral inquiries in a manner consistent with the contents of the written letter.
  3. If soliciting a reference, avoid seeking information that is prohibited under human rights legislation such as age, race or disability and if references are given, ensure they are verified.

Keep in mind that the reference will be read by other employers and therefore ensure that topical information isn’t omitted.  Get advice.