When A Reference Call Comes In: Give A Negative Reference Or Stay Silent? 

(Published August 4, 2008)

Reprinted from PERSONNEL LEGAL ALERT, a widely read employment law newsletter that keeps HR executives up-to-date on the latest court cases, legal trends, government regulations, and federal legislation that affect the policies you write and procedures you administer.  Click here to view a sample issue, get more information, or sign up for a risk-free subscription. 

The fear of a defamation lawsuit based on a negative reference is over-rated. Telling the truth and expressing an opinion in good faith are generally fair game, even if they don't paint a flattering picture of a former employee. Still, many employers would rather avoid giving references at all (except maybe to verify a former employee's dates of employment, title, and salary) than give a negative one. While this practice is not very helpful to the prospective employer, at times, it can even be downright harmful. 

Cautionary case: A medical center received a detailed questionnaire from a health care facility seeking a reference for a physician it had formerly employed.  Instead of answering questions about the doctor's judgment, his ability to perform, any signs of behavior or personality problems, or disciplinary actions taken against him, the center drafted a short letter verifying

the doctor's job title and dates of employment, and included a phone number for further assistance.

Two physicians employed at the center wrote personal reference letters on their own, stating that the doctor was an "excellent clinician," would be and "asset," and was "highly" recommended.

The health care facility hired the doctor, not knowing that he had been fired from the center for being impaired by prescription medication while on the job and putting patients at risk.  At the facility, the doctor continued to abuse prescription medication, and his actions left a patient in a permanent vegetative state. Ultimately, the facility sued the centerand the two referring physicians for inentional and negligent misrepresentation.

A jury awarded $8.24 million to the health care facility and its insurer. On appeal, the court determined that the medical center should not be held liable because its reference letter had not been misleading. The letter did not comment on the doctor's proficiency nor did it recommend him to the prospective employer.

On the other hand, the two personal references made affirmative misrepresentations by stating that the doctor was an "excellent" anesthesiologist, when they had information that he was a drug addict. In this state (Louisiana), an employer has no duty to disclose any information about a former employee. (In fact, the court stated that it hasn't found a single case outside of the state where a court imposed an affirmative duty to disclose negative information about a former employee.) But if an employer "volunteers to speak and to convey information which may influence the conduct of the other party," the employer is bound to disclose "the whole truth." (Kadlec Medical Center v. Lakeview Medical Center, 5th Cir., No. 06-30745, 2008)

Bottom line: Disclosing no information is not analogous to misrepresentation. However, providing a positive reference that covers up an employee’s problems could leave you liable for the employee’s on-the-job behavior elsewhere.

Wouldn't You Want To Know? 

Silence may be legal, but it isn't always golden. The appeals court acknowledged that the medical center might have had an ethical obligation to disclose what it knew about the fired physician.

As a general rule, it is safe to disclose information that you know is true or have a good-faith belief is true. Focus on observable behaviors without drawing conclusions based on those behaviors. For example, instead of telling the health care facility that the fired physician had a drug problem, the medical center could have attested to several objective observances of his behavior, such as his excessive withdrawals of Demerol and a lack of documentation for those withdrawals, and failure to answer a page while on duty because he was asleep, groggy, and unfit to work.

At the very least, help a prospective employer to make an informed decision by:

• Verifying whether the candidate is eligible for rehire.  A simple "yes" or "no" will suffice.
  
  
• Asking the prospective employer to tell you what the candidate has already told them, and then verify whether or not that information is true.
  
  
• Letting your documentation do the talking.  Offer to fax the candidate's last performance review or termination letter. The physician's termination letter spoke of his "impaired physical, mental, and emotional state."

Related Topic(s): Hiring - References, Termination - Defamation