Avoiding problems when giving references to prospective employers

In today’s economic climate many employers are left with no option but to let employees go. A natural consequence of severing ties with an employee is having to later provide references to prospective employers. In order to avoid potential liability for defamation or slander, employers should follow certain guidelines in giving references.

First, an employer should give advance notice of the reference. When terminating the employment, the employer should inform the employee in advance of what facts with be given in future references. Avoid simply saying that the reference will be “good” or “favorable.”

Second, be careful to avoid conclusions. Calling a former employee “insubordinate” or “incompetent” can create a potential lawsuit for defamation. Instead, state that the employee refused to follow directions, or did not meet specific standards. Remember that not all questions have to be answered, especially those that call for conclusions – such as “Would you rehire this person?”

Third, disclose only truthful information and make sure that personnel file information is factually correct. Supervisors should be trained to place only accurate, verifiable information in personnel files – a reference is only as truthful as the underlying information on which it is based.

Fourth, it’s almost always a good idea to obtain a signed release from employees regarding specific information that may be disclosed to prospective employers. The release should provide the employee with as much information as possible about information to be disclosed, including dates of employment, job titles held, a statement about the employee’s work performance, and the reason for termination of employment.

Fifth, designate only a limited number of people within the organization to give references. It is wise to notify employees, preferably in the Employee Handbook, that references will be provided by only one or two designated people. This practice will minimize the risk of contradictory references on behalf of the company, and ensure that reference standards are kept.

Sixth, avoid responding to oral references requests. Require all employees asking for references to request the reference in writing, and to provide a signed statement from the employee authorizing the prospective employer to obtain a reference. Also, reply only in writing to reference requests and keep a copy of all documentation.

While most references given to prospective employers will not result in problems down the road, taking some minimal precautions, as outlined above, can save companies substantial amounts of time, money, and stress. Termination of employees is part of doing business, and so is giving references. Make sure you do it right.