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Avoiding Liability in Employee References

By Gary S. Kessler and Philip G. McNicholas

A former employee asks you to list your firm as a reference on a job application; then you receive a phone call asking your opinion of the individual. Generally, if you have given the go-ahead to your listing as a reference, you only have good things to say about that person. But what if you are called about someone who did not ask and whom you would not recommend? What can you say? Can you inform the caller? If your former employee does not get the job and finds out about your negative reference, what is your exposure?

In this article, we explore the employee reference conundrum faced by many employers. First, we provide background on “defamation” in general. Next, we discuss available defenses and what circumstances can immunize an employer from a defamation lawsuit. Then, we discuss whether an arbitration clause in an employment agreement can successfully preclude defamation lawsuits from the courtroom even after employment is ended. Finally, we briefly summarize the best practices for avoiding defamation liability.

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