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Businesses Beware! The Dangers of Providing Employment References

Employers must understand that providing references can lead to serious problems, including lawsuits for retaliation or improper interference with the former employee’s opportunity to secure a job, as well as for negligence for failure to provide information that a prospective employer needs to avoid serious harm.

It is important to establish a detailed procedure so that careless or casual responses to reference inquiries do not lead to disastrous litigation. A crucial first step is to designate who is authorized to respond to reference requests, so that replies will be consistent and in compliance with company regulations. It must be well known that only those designated may provide references, and that any questions (to an employee’s former supervisor, for example) must be referred to those designated to respond.

The safest course of action is to provide just basic information when a reference request is received.  Until recently that information included dates of employment, job title and salary.  Now, however, with some cities (including New York) and states passing legislation making inquiries about salary history unlawful, employers would be smart to omit that information entirely. That protects them from being dragged into litigation if an applicant believes his or her rights were violated because of improper gathering of wage information.

Employers acting in a consistent manner, and in good faith, meaning that any comments can be supported by objective evidence and without intent to malign with untruthful, harmful statements,  and who provide information that is clearly  job related, should be able to avoid suffering damages as a result of a law suit.  Obtaining a release and waiver from the former employee before providing a reference yields even stronger protection.

But employers must be aware that providing unjustified ‘rosy’ references which can mislead a prospective employer can also result in litigation, especially where an omission or misdirection exposes the new employer or its employees or customers to potential harm. Covering up embezzlement, child abuse, or other egregious behavior is just as negligent as providing false and malicious information.

A well thought out consistently applied process, appropriately documented with relevant and truthful information, especially where a release has been obtained, should provide an employer the protection it needs to defend itself in litigation resulting from reference responses.

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