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Truth or Consequences, Alaska

Honesty best policy for references


When you terminated Carl, he threatened to sue you. To avoid trouble, you gave him a month of severance pay and provided him a bland yet positive letter of reference. Will your reference letter backfire on you when the next employer that hires Carl finds out he interviews better than he works?

When Katherine quit, you felt glad to be rid of such a toxic employee. Then you receive a call from a prospective employer you know well. You wouldn’t wish Katherine on your worst enemy. Should you tell the truth?


As a supervisor, what risks do you take when you provide negative information on former employees? Do you incur a risk when you write letters of reference – even positive ones?

According to the American Business Law Association study on defamation suits and plaintiff’s awards, managers fearing defamation suits when giving bad references risk little. Few defamation cases make it to trial and the former employee plaintiffs lose 75 percent of these cases. Further, Alaska Statute 965.160 provides good faith protection to employers who give factual, though negative references. Disgruntled former employees have to prove “clear and convincing evidence” of negligence or bad faith on the part of their former employers to win defamation suits.


In contrast, employers provide falsely positive references or fail to give prospective employers negative information about former problem employees take on potential liability for problems their honest disclosure could have prevented.

As an example, a Florida judge ruled Allstate Corp. could be sued for punitive damages for concealing a former employee’s potential violence. Allstate management fired an employee for bringing a gun to work yet wrote a recommendation letter stating the employee was let go as part of a corporate restructuring. Fireman’s Fund Insurance Co. relied on Allstate’s recommendation and hired the former Allstate employee who then shot five coworkers in the Fireman’s Fund cafeteria.

In another landmark case, a school vice principal received praise and positive letters of recommendation from three former school districts, despite being involved in sexual misconduct with students at all three districts and being forced to resign from two. After he molested a 13-year-old girl at a fourth school, she sued all four districts. California’s Supreme Court ultimately ruled that employers have a duty to disclose negative information if the problems could expose future individuals to physical harm.


What guidelines should you follow when asked for reference information on a former employee? If you receive a phone call asking for a reference, find out exactly whom you’re speaking to. When answering questions, be brief and stick to the truth. If you’re describing a former problem employee, avoid any temptation to exaggerate or vent.

If you’re tempted give a falsely positive reference, remember what you say can come back to haunt you. If you discharged a former employee for a serious offense, either run the situation by your attorney or ask the prospective employer to fax you a waiver, signed by your former employee, limiting your liability for any information you give.

About the Author

Local management/employee trainer and consultant and the author of Managing Equally and Legally, Won By One and Solutions, Dr. Lynne Curry regularly provides managerial, leadership and board training seminars as well as public seminars. Curry’s company, The Growth Company Inc., offers a free monthly “breaking news” HR/management newsletter and two seminars (70 minutes and three hours) monthly.

For more information on The Growth Company Inc.’s training and HR On-call services to companies needing help with recruiting, team-building, strategic planning, management or employee training, mediation or HR trouble-shooting, please visit www.thegrowthcompany.com.


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