Another development in employment law involves providing references regarding a former employee. Either the former employee or a third party, such as a prospective employer, may bring an action. A former employee may claim he or she was defamed if a negative recommendation with false information was provided to a prospective employer.

On the other hand, a prospective employer who hires an employee based on a positive recommendation that was false may make a claim for fraud or misrepresentation.

Here’s an example of how a positive reference that’s false could result in a lawsuit: An employer offers a glowing recommendation (such as “great with students”) of a former employee to a school currently interviewing the teacher. The former employer is aware that the teacher had a history of improper touching of students. The teacher is subsequently accused of sexual molestation of a student in his new job. The former school could be held liable for misrepresenting the teacher’s character or qualifications.

To limit your liability in this situation, we recommend that you include an “Outside Inquiries Policy” [awaiting link] in your employment handbook that explains how employment verifications and recommendations will be handled.  You may consider funneling all requests for information through one person or department and obtaining an employment applicant release before releasing or requesting any information. It may also be helpful to use a standard form for providing employment references.

See Brotherhood Mutual’s sample form: Reference Response Information.