Providing references for a departing employee who is interviewing at another company may seem a simple enough task.
However, if not managed properly, the job of fulfilling a request for employee references can expose your company to liability.
When a former employee is seeking a position at another company, it is customary for the recruiter to request references concerning the candidate’s performance in a previous position. From the former employer’s point of view, there are two areas of concern in complying with this request. First, there is a duty to provide accurate information to the prospective employer. Second, there is also a duty to assist the former employee who wants the best reference possible.
If the former company offers a negative reference and the former employee does not get the desired job, he or she may sue, citing slander or defamation of character. Providing a positive reference also has its risks. If the candidate gets the new job but thereafter commits a crime or causes harm to another employee, the new company may bring a lawsuit against the company that provided that positive reference.
How some companies handle the task
Many companies today use the bare-bones approach to providing references for employees interviewing for new positions. When a recruiter asks for references, the former employer only confirms the candidate’s job title, salary and dates of employment. The contact will not provide information concerning job performance. This is a “no comment” reference. Other companies, however, go in the opposite direction in providing what they call “full disclosure.” In this approach, the former company provides an abundance of facts about the former worker, including job performance and performance appraisal information.
Taking the wrong approach to providing employee references has consequences. It can expose the former company to liability, either from a disgruntled former employee or a new company that feels duped into taking on an unsuitable new hire. However, with the appropriate legal guidance and support, a company can structure rules for providing references that serve their purpose and keep the former employer out of the courtroom.