When completing reference checks, a person picks up the phone to call a former employer.

Can an employer give a bad reference check?

There is often confusion about rights and responsibilities when it comes to employment reference checks. Both employers and employees are often not clear on this, even though a reference check is often a major factor in a person’s ability to secure a new job. Below we address some questions that commonly arise. 

Does a former employer have to participate in reference checks?

Generally, an employer is not required to partake in reference checks for a current or former employee who is engaged in a job search. Sometimes, however, there is a contractual agreement between the parties that creates such an obligation. It is important to review the terms of any employment contract or severance agreement to determine what exactly the employer has agreed to do in response to a request for a reference. 

Out of fear of being sued for saying something negative or unhelpful, many employers assume it is better just not to agree to reference checks. In many workplaces, policies exist that allow HR to provide only a “tombstone letter” in response to reference checks, that is, a basic letter that states only the employee’s position and length of service with the company, with no assessment of their performance and strengths. 

However, that is not often the best approach. First, where your employees know that, if the time comes to leave for a new job, they may be given a meaningful and positive reference, they are more motivated to perform well, and to demonstrate professionalism and dedication to the employer. Such employees deserve a good reference. Moreover, as explained below, in the case of problem employees, the employers’ fear of liability for making negative comments is often mistaken.

Can an employee sue an employer who speaks negatively of them in reference checks? 

An employer is rarely liable for making critical comments about an employee in reference checks, provided it does so professionally and honestly. 

Even where an employer makes seriously negative comments that cost the employee the new job, a defamation claim is unlikely to succeed unless the comments were made with malice or some ulterior motive (for example, if the person giving the reference lied because they wanted that job for themselves). This is because the defense of “qualified privilege” is available in the context of reference checks. To avoid “malice”, employers should speak professionally during reference checks, using reasonably considered and objective language. They should simply state what they genuinely believe their employee did or failed to do.

The employer can further avoid a claim based on negligence, libel or slander if it makes a reasonable effort to check the employee’s file and speak with those who worked with the employee, to ensure its comments are not seriously inaccurate. If, however, the employee was not a good performer, or if the employer would refuse to rehire the employee, the employer is entitled to say so and explain its reasons.

Further, if out of fear of being sued by the employee, the old employer leaves major, serious negative facts out of a reference check, it is even possible that the new employer could sue for non-disclosure. For instance, if an otherwise good employee was terminated for something serious like theft or a violent assault in the workplace, it could be negligence to avoid mentioning this in a reference check. If the employee goes on to commit theft against the new employer, it may have a case for negligent non-disclosure against the old employer. 

If there is an ongoing wrongful dismissal dispute, should the employer still offer to provide reference checks?

Even if the employee sued the employer for wrongful dismissal (or has threatened to do so) and the dispute is not yet resolved, it is often still a good idea to provide a reference. 

Certainly, if the employee was dismissed for cause – that is, for misconduct – then refusal to provide a good reference makes sense. But in most cases, employees are terminated without cause and any legal dispute involves only the amount of severance owed. In these cases, the employer should consider doing everything it can to assist the employee in finding new work, which could include providing a reference. This will not only help the employee move forward in his or her career. It could also help limit the employer’s liability by assisting the employee to mitigate his or her damages

The bottom line

Though not legally required, it is often a good idea for employers to provide substantive references for employees. An honest positive reference is often in the best interest of both the employee and the former employer. On the other hand, an employer is unlikely to be held liable for negative comments in the course of a reference check, if such comments are made professionally and in good faith.

LinkedIn provides a great list of questions to ask when preforming a reference check. Reviewing this list can help you prepare to offer the reference check for the employee.

In any particular case, you should consult with an experienced employment lawyer to help determine your rights and responsibilities with respect to reference checks.

The above is provided for informational purposes only and does not constitute legal advice — contact a lawyer to discuss your personal circumstances and learn your options.

About the Author

This article was written by Daniel Wilband, one of our employment lawyers. To learn more about Daniel, please visit our about us page. To learn more about our services in employment law, please visit our employment law page.

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