Solving the Reference-Checking Puzzle
By: George Lenard
Despite employers' tendency to be tight-lipped, a properly conducted reference check can still prove a very useful source of information.
If your company has a policy on responding to requests for employee references, it probably reads something like this:
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All requests for employment references must be directed in writing to the Human Resources Department. Responses will be limited to dates of employment and positions held. No other information regarding present or former employees may be disclosed to any outside parties.
What's the problem?
Employers are increasingly adopting such "name, rank and serial number" policies, largely due to concerns about possible litigation, especially defamation claims. This makes it more difficult for employers to obtain meaningful information through reference checking.
This column, to be continued next month, examines several aspects of the reference-checking conundrum. What is behind the legal fears? What about relaxing the policy on giving references in an effort to promote more open communication among employers? How can one maximize the likelihood of obtaining useful information through reference checking?
Hasn't the reference checking process become just a useless waste of time?
Tempting as it may be to write off this often time-consuming step of the hiring process as futile and ineffective, doing so is inadvisable. Powerful legal and business reasons remain for making all reasonable efforts to investigate the background and suitability of job candidates, and checking references continues to play an important role in this process.
Legally speaking, omitting reference checks can be viewed as a negligent conduct supporting a negligent hiring claim. Information obtained from references may help defend a negative hiring decision against a discrimination claim. Business-wise, the hiring process is too important, and the potential costs of hiring unsuitable employees too high, to bypass a potentially important source of information, even if often this potential does not materialize.
Despite employers' tendency to be tight-lipped, a properly conducted reference check can still prove a very useful source of information. Such information can help employers avoid hiring chronic problem employees, such as those with poor productivity, poisonous attitudes, or propensities to engage in harassment or violence. On the other hand, favorable responses from references can help confirm the desirability of hiring applicants who otherwise appear suitable.
Defamation worries
One predominant legal fear underlies most employers' reluctance to share employee information when requested for references. They believe an employee dissatisfied with a reference can easily pursue a claim for defamation (libel or slander).
This legal risk is indeed real, but it should be viewed in proper perspective. Many employers may have an unrealistic view of the dangers of a defamation claim resulting from a carefully worded and honest response to a reference request. The old saying that a little knowledge of the law can be a dangerous thing is certainly true if it causes legal risks to be overestimated (or underestimated). So let's look at the risk of defamation claims. (There are some variations in defamation law from state to state; this discussion concerns general principles only.)
Of course, anyone can file a lawsuit alleging anything, including defamation. But first the person must learn that the company gave a bad reference. In many cases the employee will be in the dark, never learning that a bad reference caused a decision not to hire him or her. Many employers that are tight-lipped about giving out references will be equally tight-lipped when they obtain useful reference information from other employers and will not disclose the receipt of such information to the applicant.
Employers should be aware, however, that a new industry has sprung up, offering job seekers the service of investigating references being given by their former employers. One such service can be found at www.references-etc.com, which says if an employer under investigation asks about their company before providing a reference, they "honestly tell them we provide employment . . . screening services for numerous companies and clients" (not saying that in this instance the client is not a prospective employer but the employee about whom the inquiry is being made).
Proving defamation
While it is easy to file a defamation claim (I always say anybody can sue anybody for anything, as long as they pay the filing fee), actually proving such a claim requires clearing some significant hurdles.
The first hurdle for a defamation claim is that the statement must be false. Put otherwise, the truth is always a defense. Additionally, because opinions can't be true or false, statements hedged carefully as opinion rather than fact may be more defensible.
Because of these basic principles, exactly what you say and how you say it can be critical to minimizing defamation risk. For example, the truth of a former supervisor's statement "I wouldn't rehire him" is much harder to dispute than the truth of the reasons underlying the supervisor's attitude towards rehire, such as if he said "I wouldn't rehire him because he sexually harassed coworkers."
Then there's the hurdle known in many states as qualified immunity. Under this doctrine, defamation claims arising from communications between parties sharing a mutual interest, which has been interpreted to include employers giving and receiving references, face a higher standard of proof. Evidence of malice or reckless disregard of the truth may be necessary. In many states, this qualified immunity principle has been incorporated into a law specifically protecting employers.
Finally, some practical considerations may deter defamation lawsuits based on references. The litigation process itself can aggravate an employee's concerns that false information is being spread. The alleged defamatory statements are likely to become part of the lawsuit's public record and may even receive some media publicity. If the employee loses the action, this fact may be viewed as confirming that the negative statements about them were true.
So defamation litigation is a valid concern, but giving honest, references going somewhat beyond "name, rank and serial number" need not unduly expose employers to such litigation if carefully expressed as statements of opinion (for example, "his supervisor's opinion was that he was not giving his best efforts") or of readily provable fact (for example, "she was absent without excuse an average of five days a month last year").
Other reasons employer don't give truthful references
Astute employers recognize that it may be wise to avoid taking any action, including giving a negative reference, that hampers a terminated employee's ability to obtain new employment. The likelihood that a termination will lead to legal claims and the value of any such claims are both significantly reduced if the employee promptly finds suitable employment.
Besides, what's in it for the employer that helps another employer -- possibly a direct competitor -- improve its hiring by providing useful information? Cost-benefit analysis says there's legal risk (we can debate how much) and no benefit. That's a no-brainer.
Negligent hiring: legal dangers from failing to check references
This state of affairs results in a real danger that employers' will result in problem employees being passed off to other employers, where they may repeat the same patterns of misconduct, perhaps with even worse effect.
When an employee engages in severe misconduct that harms others -- such as workplace violence, theft of customer property, or harassment of other employees -- negligent hiring is one legal claim that is often raised.
A negligent hiring claim requires proof that the employer failed to make a reasonable pre-hire investigation. It also requires proof that had it done so it would have learned the employee had a propensity to engage in the type of conduct that caused the harm. (Again this is speaking very generally about a matter that has some state-to-state variations.)
The possibility of such claims is alone reason enough to continue vigorously checking references despite the oft-encountered "wall of silence." Assuming that reference checking will hit that wall and thus be futile will be no defense to negligent hiring; actually hitting the wall after making a reasonable attempt likely will be. Additionally, to avoid negligent hiring claims other aspects of a background investigation, such as police and driving record checks, may be necessary.
A new claim: negligent failure to respond truthfully to a reference request
A next logical step in litigation arising out of severe employee misconduct is an action against the former employer whose tight-lipped reference policy -- or favorable reference -- led another employer to hire a dangerous employee.
Traditionally, there has been no duty to provide information under such circumstances. But under the current social and legal environment a workplace violence or harassment case might well succeed on such a theory. The claim may have much appeal if the ultimate result was truly extreme conduct such as a workplace shooting, and there is strong evidence the employee had engaged in similar misconduct at a prior job and the prior employer actively covered it up.
Summing up the legal environment and its implications
At this point readers may feel that employers are in a hopeless "can't win" situation, faced with frightening legal risks no matter what action they take regarding giving and getting references. In a sense this is true, but there may be a middle ground that will minimize the various risks.
First, in responding to reference requests it may be time to thoughtfully reconsider the "name, rank and serial number" policy. Chances are good that in many companies such a policy is more honored in the breach than the observance everywhere but in legal and human resources departments.
A somewhat more open policy may help avoid claims based on negligent failure to respond truthfully while still controlling communications carefully enough to avoid defamation liability. Supervisory employees may be more willing to follow official policy if they know requests for references will receive meaningful responses if redirected through official channels.
A beneficial effect of such a policy change may be an enhanced ability to obtain useful information from other employers. There may be a reciprocity effect ("I'll tell you if you'll tell me"), particularly in a smaller community and/or an industry with relatively few players.
Second, the possibility of negligent hiring claims supports continued efforts to incorporate reference checking into the pre-hire process. This is especially important for employees whose duties put them at higher risk, such as those who will be working under little supervision or who will have access to employer funds, valuable employer property or information, or customer property or premises.
Even a basic "name, rank and serial number" reference can be quite useful
Resume fraud is rampant today. Even the most tight-lipped reference will be willing to provide information that may expose misrepresentations of basic applicant information.
An applicant may seek to cover up a period of lengthy unemployment by fudging dates of employment. Simply requesting confirmation of the dates of previous employment given on an application or rEsumE, which is unlikely to meet resistance from a former employer, can expose potentially significant misrepresentations.
Similarly, even a relatively cautious response to a reference check may expose a blatant misrepresentation regarding title, job duties, skills, training, or education, all facts frequently altered by applicants. All without getting into more sensitive areas such as reasons for leaving or evaluation of work quality or habits. Much more may be learned if reference checking is pursued more thoroughly and such sensitive but important topics are approached properly.
