Wednesday, July 30, 2008

Think Before You Give A Former Employee A Reference!

(Called as a reference for a former Employee? THINK before speaking.)

The attorneys at Gross & Romaick's Business Law Division offer some advice for business owners who've been asked to give a reference for a former employee.

It is more dangerous than ever to speak with a potential employer of your former employee. The Fairfax County Circuit Court in the case of Elsami v. Global One Communications, Inc. (Fairfax County Circuit Court, Law # 174096, January 11, 1999), recently permitted a defamation action to proceed against a corporation that responded to a reference inquiry.

In the Elsami case, a former employee provided his prior employer as a reference. The employee was in a managerial position in charge of the day to day running of the business in Malaysia. When contacted by a potential new employer, the former employer is alleged to have stated that the employee "lost his temper" and "just did not fit in". The employee claims that these statements cost him the potential job, so he sued his former employer for defamation.

The Fairfax County Circuit Court is allowing the case to proceed toward trial, finding that the statements made by the former employer were statements of fact, not opinion, and could have impugned the employee's professional reputation and negatively impacted his profession by preventing him from obtaining new employment.

What is an employer to do?

Although Mr. Elsami must still prove that the statements of fact were false, the Fairfax case illustrates the danger of providing references for former employees. Any time you speak with someone about a former employee, you place yourself and your company at risk of being sued. Moreover, the distinction between permissible negative opinions and impermissible factual misstatements is too difficult to determine when giving a negative reference.

The safest route is to adopt a company policy not to provide any information beyond position held and dates of employment. Any additional information and you may find yourself in expensive litigation defending your statements.

Theoretically you could obtain a written waiver and release from your former employee before speaking with third parties. Another alternative is to only give written references directly to the employee, which they can distribute to potential employees if they so choose. The safest course is to provide no statement at all.

To seek legal counsel for your Virginia business, contact Gross & Romanick today.