Feb 03, 2017

Defamation Claims from Former Employees

By: Allison Mann

Reference checks are one tool many employers use in the hiring process. However, the situation can get legally complicated when you, as an employer, are formally asked to give a reference by a potential new employer. As it oftentimes happens, you may not want to give that employee a glowing reference. In addition, trouble arises when an employer informally speaks negatively about an employee. Defamation claims are probably the most commonly seen consequence, but it is not uncommon for retaliation or discrimination claims to also arise out of these instances. The scope of this article is limited to defamation.

Employer Protections:

Employers are not without protection from defamation claims. The North Dakota legislature has taken steps to immunize North Dakota employers against potential frivolous lawsuits from spurned former employees. North Dakota Century Code § 34-02-18 provides two levels of protection.

First, it specifies information that an employer may disclose truthfully without fear of reprisal, including date of employment, pay level, job description and duties, and wage history. This exception is fairly straightforward.

Second, it grants immunity to an employer for the disclosure of information relating to a current or former employee’s job performance to a prospective employer. In order to qualify for this immunity, the employer must be disclosing the information in good faith. This gets a little trickier to evaluate. An employee may assert that an employer is not acting in good faith by presenting evidence that the information disclosed was:

(1) Knowingly false;
(2) Disclosed with reckless disregard for the truth;
(3) Deliberately misleading; or
(4) Rendered with malicious purpose.

This immunity will not protect an employer from disclosing information that is confidential.

A Case Study: Forster v. W. Dakota Veterinary Clinic, Inc.

In this case, the plaintiff worked as a vet tech for the employer, but parted employment on less than pleasant terms. The employer accused the plaintiff of theft and animal abuse, and reported it to local authorities. No charges were ever brought against the plaintiff.

Plaintiff attended a state meeting of veterinarians in search of a new job. Her former employer was also at the meeting, and spoke negatively about the plaintiff to several potential employers. She stated: (1) that the plaintiff had broken into her clinic; (2) that she stole medication; and (3) that she poisoned the employer’s horse. None of those potential employers hired the plaintiff. In addition, the employer made several comments of the same nature to individuals in the industry outside of the conference.

Thereafter, plaintiff brought defamation claims against her former employer, in conjunction with a wrongful termination claim. The court determined that the employer was not eligible for immunity applicable to job references because the employer was not asked to give the reference, but volunteered the information without prompting. Ultimately, the court upheld the jury’s $160,000 award plus attorneys’ fees for the employer’s defamatory statements.

The Takeaway:

As is seen above, speaking about former employees can put your business at risk. However, the potential new employers are not going to stop checking references, and it is a resource in the hiring process. As the Forster case demonstrates, employers should have a plan or policy in place regarding formal references and more informal conversations about former employees. The following general guidelines provide potential starting points for crafting that plan:

• Specify which employees are allowed to respond to reference requests.
• Decide which type of information you will disclose in a reference. Clearly delineate which type of information you will not or cannot disclose.
• Establish guidelines as to how you will respond to specific questions (i.e. reason for leaving, performance evaluation, and would you rehire).
• Ask that all reference requests are submitting in writing by potential new employers.
• Determine whether you will respond to references orally or in writing.

These guidelines are only the start of a plan. If there are any specific legal questions, competent counsel should be consulted.

Our Interest in Serving You:

My law firm’s goal is to give understandable information and to foster discussion about real-life issues facing human resource professionals. If we are not achieving that goal or if you would like us to address other employment law issues, please email me at amann@ndlaw.com. We promise to take your comments and ideas to heart.

Disclaimers
(Otherwise known as “the fine print”)

I make a serious effort to be accurate in my writings. These articles are not exhaustive treatises, though, so do not consider them complete or authoritative. Providing this information to you does not create an attorney-client relationship with my firm or me. Do not act upon the contents of this or of any article on our homepage or consider it a replacement for professional advice.

Reprinted with permission from an article submitted for publication in the February, 2017 Southwest Area Human Resource Association newsletter.