Legal Issues: References

November 2, 2015 | By George C. Hlavac, Esq., and Edward J. Easterly, Esq.

Legal Issues
Man and woman reviewing a document

TAGS: candidate selection, journal, legal issues, references,

NACE Journal, November 2015

When a student fails to obtain a job, he or she may look at several different factors when trying to determine why. One place former employers and educational institutions do not want the proverbial finger pointed is at a reference they provided for that student.

There are no federal or state laws that currently require employers or educational institutions to provide references for individuals. Accordingly, whether to provide a reference is in the sole discretion of the employer or educational institution. What information is ultimately provided can result in a legal land mine. There are, however, certain protections afforded to reference providers when information about an individual is disclosed. The key for reference providers is to know what information should and can be disclosed, and what legal ramifications arise as a result of improper disclosures.

An Example

A student has a summer internship at Company ABC. The internship is sponsored by the educational institution for one of the student's classes. At the conclusion of the internship, the employer provides the institution with a written evaluation for the student and keeps a copy in its records. The evaluation of the student is not glowing. The student was repeatedly late to work and failed to complete assignments. The evaluation was also provided to the career center and the student's faculty adviser.

After graduation, the student puts the internship at Company ABC on his resume and potential employers begin contacting Company ABC for references. Company ABC reads directly from the evaluation and the student is repeatedly rejected from jobs. The student subsequently finds out that Company ABC's reference is the reason for his unemployment situation. Is Company ABC facing potential liability?

Analysis

Whether Company ABC is liable depends on a variety of factors. The primary causes of action, however, that may be brought by the student are for defamation or tortious interference with business contracts. Depending on the circumstances, there may also be liability for claims of discrimination, retaliation, or providing a "negligent referral."

To maintain a cause of action for defamation, the student must establish that the reference contained false and defamatory material and that it was communicated to a third person. For a statement to be deemed "defamatory," it must harm an individual's reputation and lower him or her in the esteem of the community. Courts have indicated that such a statement must result in some tangible harm to the person (e.g., loss of money, business, or employment). In addition, a substantially true statement may be defamatory if it is incomplete and misleading.

Generally, courts rarely determine that statements pertaining to job performance are defamatory—unless an employer falsely accuses an employee of criminal conduct, lack of integrity, dishonesty, incompetence, or reprehensible personal characteristics or behavior. In the example, Company ABC has repeatedly informed other potential employers about the student's incompetence, so there is potential liability associated with the reference. Company ABC has an escape hatch, however, if it has documentation to support the statement's veracity.

Qualified Privilege

If an employer can establish a qualified privilege between former and prospective employers, even if statements made about the student are false, it can escape liability. Thus, the qualified privilege for referring employers exists provided the speaker makes the communication in good faith and has a public or private duty; or has a legal, moral, or social obligation to do so. Additionally, the prospective employer receiving the information must possess a corresponding duty or interest in the communication.

However, a statement loses its privileged character if the communicator is motivated by ill will, demonstrates excessive communication of the statement, or conveys the statement without grounds for believing it to be true. An employer or educational institution may be protected by a qualified privilege concerning an employee when disclosing information is necessary to serve the employer's legitimate interest in an employee's fitness to perform.

Further, the majority of states have adopted specific legislation that protects an employer's disclosure of information about former employees. In this regard, generally, provided such statements are based upon a reasonable investigation of the facts, the disclosure of information will be protected by the applicable laws.

In the example, Company ABC had a legitimate interest in assessing and disclosing the employee's ability to perform for future employers. Provided such assessments of the student were not motivated by ill will or communicated to individuals not privy to such information (i.e., telling the janitor about the employee's performance), Company ABC should not lose the qualified privilege regardless of the accuracy of the statements.

Therefore, Company ABC should not be liable for disclosing the communication to prospective employers. However, Company ABC also disclosed this information to the career center and the student adviser. What happens if the student adviser subsequently discloses this information to a potential employer in a reference letter requested by the student?

The student adviser's primary defense is that the statements provided were true. Even if the student adviser did not verify the allegations, he or she can still avoid liability. While courts have not generally addressed the "qualified privilege" argument for such a disclosure, nor if the "employer privilege" would apply, an argument could be made that the adviser would not be liable for defamation. After a referral source claims the privilege, the student must establish that the statement was made for malicious purposes. The referral source will not be liable for sharing information he or she had a reasonable basis for believing. As courts have indicated, it is in the public interest that information regarding an employee is readily available to the prospective employers.

Here, the referral source—the student adviser—had a reasonable basis for believing the evaluation. The student worked for the individual providing the evaluation, and the evaluation came directly from the employer, not a third party. The student adviser should be able to maintain immunity from a claim for defamation.

Based upon the foregoing, it is difficult for a student to maintain a cause of action for defamation in the employment arena. The student must prove that the statements made were intentionally false and made with ill will to overcome the immunity provided by the majority of courts.

Tortious Interference

The second cause of action is tortious interference. This is significantly more difficult to establish for the student intern in the example. To maintain a cause of action for tortious interference, the student must establish that he or she had a reasonable expectation of entering into a valid business relationship, the employer or educational institution knew of the expected relationship, and that the employer or educational institution purposefully interfered with and prevented the relationship from occurring.

Courts have routinely stated that merely providing a negative reference will rarely lead to a cause of action. As with defamation, the student must establish that the employer or educational institution provided the negative reference out of spite or ill will. If such elements are not present, there is minimal chance of recovery against the referral source.

Discrimination and Retaliation

Another potential pitfall for referral sources lies with anti-discrimination laws. Title VII (which prohibits race, religion, national origin, and gender discrimination), the Americans With Disabilities Act, the Genetic Information Nondisclosure Act, and the Age Discrimination in Employment Act prohibit discrimination in employment. The laws also prohibit retaliation against individuals who engage in a protected activity.

Regarding retaliation, if the student intern from the scenario complained about discrimination or harassment while employed, he or she has now engaged in a "protected activity." If Company ABC subsequently provides a negative reference to prospective employers, the student may bring a cause of action against the company for retaliation pursuant to the anti-discrimination laws. The burden then shifts to Company ABC to provide a legitimate, nondiscriminatory reason for giving the negative reference. It is imperative that a referral source maintains proper documentation if it provides a negative reference for any individuals, specifically those who have engaged in a protected activity.

While, at this time, there is no specific case law dealing with the presented scenario as it pertains to references provided by educational institutions, students are afforded similar protections. Should a student lodge a harassment or discrimination complaint against a career center or faculty member and subsequently receive a negative reference, the educational institution would be exposed to potential liability. Accordingly, educational institutions should base all references on facts that can be supported by documentation.

Moreover, references should not disclose any "protected" information, such as an individual's race, religion, gender, genetic information, sexual orientation, national origin, age, or disabilities. Information that would be considered personal, such as economic status, parental/marital status, or any type of information, which, if disclosed, would be considered an invasion of the person's privacy, should not be disclosed.

Employers and educational institutions should also maintain uniformity when dealing with references. Policies and procedures should be implemented to ensure that all requests for references are dealt with in a similar manner for all individuals regardless of race, gender, religion, genetic information, sexual orientation, age, disability, national origin, or any other protected class. The foregoing policies, however, must be uniformly applied to all reference requests. In this regard, an employer or educational institution may not pick and choose to whom to provide a reference. If a policy is not uniformly applied, it may open up the employer or educational institution to a cause of action for discrimination.

Negligent Referrals

If employers and educational institutions were not already worried enough about providing information in a reference, there is also potential liability for failing to provide information that should have been disclosed.

Simply, a cause of action for a "negligent referral" arises when an employer fails to disclose information about a former employee that then leads to an injury or an incident involving a third party. By way of example, instead of issues with performance, Company ABC terminated an employee's employment for severely assaulting a co-worker. Company ABC is subsequently contacted by a potential new employer for the employee requesting a reference. Instead of disclosing the assault, Company ABC informs the potential employer that the employee merely had "performance issues." The potential employer hires the employee, who then assaults a co-worker at his new job. Company ABC is now potentially liable for a negligent referral.

The same theory of liability can be passed to the educational institution. If, in the above example, the employee was a student performing an institution-sponsored internship, the educational institution may become aware of the student's dangerous behavior through the employer. If the educational institution fails to disclose such information when requested, it may be held to the same liability as Company ABC.

Generally, a negligent referral case does not apply to a failure to disclose poor performance, but to significant issues at work (i.e., harassment, discrimination, or dangerous behavior). Accordingly, referral sources need to worry not only about what they do say, but also what they fail to disclose.

Family Educational Rights and Privacy Act

Faculty or other school personnel who are asked to give references have an additional duty under the Family Educational Rights and Privacy Act (FERPA). FERPA requires that federally funded institutions, under programs administered by the U.S. Department of Education, comply with certain procedures on disclosing and maintaining educational records. FERPA was not enacted to preclude the disclosure of educational records simply because the records identify a student by name; rather, it was designed to protect the student's educational information and status as a student.

FERPA prohibits the disclosure of a student's protected information to a third party, thereby prohibiting the disclosure of educational information to potential employers without the prior approval of the student or parent. This includes, but is not limited to, information such as records, files, documents, and other materials maintained by an educational agency or institution, or by a person acting for such agency or institution.

According to FERPA, a student is defined as an individual who is enrolled in and actually attends an educational institution. The regulations provide that attendance includes, but is not limited to, attendance in person or by correspondence. Courts have held that individuals who merely audit classes or who are accepted to an educational institution but do not attend any classes are not "students" for purposes of FERPA. A student also includes individuals who "attend" classes but are not physically located on a campus. The foregoing includes students who attend classes by videoconference, satellite, Internet, or other electronic information and telecommunications technologies.

With respect to reference letters and resumes, the critical inquiry is whether these records include or incorporate the student's "educational information" (i.e., GPA, grades, social security numbers, evaluations, and so forth). If these documents contain "protected" educational information, they cannot be disclosed without satisfying FERPA's pre-disclosure requirements. As such, an educational institution may not provide an employer, headhunter, or other employment agency with a student's resume or confidential letter of reference that contains protected educational information unless it first obtains approval from the student or the student's parent.

FERPA further requires an educational institution to grant students access to their educational records, including letters of recommendation. A student may waive the right to access confidential letters of recommendation. Such a waiver must be in writing. Should a student provide a waiver to the institution, this should be explicitly stated in the letter of recommendation itself.



Referral sources should be mindful of any information that is provided to potential employers. Any negative information may put an individual or entity on the defensive, especially if it costs someone a position.

Consider these quick tips when providing references and referrals:

  • Prior to providing a reference, obtain written consent from the person about whom the reference will be given.
  • Develop policies and procedures about providing references, including, if possible, designating specific individuals to provide references.
  • Employers are encouraged to provide only "necessary" information. This includes dates of employment, salary information, and position.
  • Disclose significant information (i.e., dangerous or harassing behavior) if supported by an investigation and documentation.
  • Follow your organization's policy regarding providing a reference.
  • Avoid lunch discussions or "off the record" telephone conversations with prospective employers regarding a person's performance.
  • Be mindful of what is placed on social media (i.e., Facebook, Twitter, and so forth).
  • If you are unaware that the job applicant has named you as a reference, ask the prospective employer for verification that the person has given consent for the reference.
  • Provide only factual information, based upon personal knowledge/observation of the person through direct contact with the person or obtained from the person's personnel record or student record.
  • Respond to direct and specific inquiries about the job applicant as per your organization's policies and procedures. Direct the response to the person who requested the information.
  • Relate the reference to the specific position for which the person applied and the work that the applicant will perform.
  • Do not provide subjective statements or opinions; only provide factual information that can be substantiated.
  • Maintain uniformity with referrals. 

blank default headshot of a user George C. Hlavac, Esquire, and Edward J. Easterly, Esquire, are attorneys in the Labor and Employment Law Department at Norris, McLaughlin & Marcus, P.A.

Legal Issues: References

November 2, 2015 | By George C. Hlavac, Esq., and Edward J. Easterly, Esq.

Legal Issues
Man and woman reviewing a document

TAGS: candidate selection, journal, legal issues, references,

NACE Journal, November 2015

When a student fails to obtain a job, he or she may look at several different factors when trying to determine why. One place former employers and educational institutions do not want the proverbial finger pointed is at a reference they provided for that student.

There are no federal or state laws that currently require employers or educational institutions to provide references for individuals. Accordingly, whether to provide a reference is in the sole discretion of the employer or educational institution. What information is ultimately provided can result in a legal land mine. There are, however, certain protections afforded to reference providers when information about an individual is disclosed. The key for reference providers is to know what information should and can be disclosed, and what legal ramifications arise as a result of improper disclosures.

An Example

A student has a summer internship at Company ABC. The internship is sponsored by the educational institution for one of the student's classes. At the conclusion of the internship, the employer provides the institution with a written evaluation for the student and keeps a copy in its records. The evaluation of the student is not glowing. The student was repeatedly late to work and failed to complete assignments. The evaluation was also provided to the career center and the student's faculty adviser.

After graduation, the student puts the internship at Company ABC on his resume and potential employers begin contacting Company ABC for references. Company ABC reads directly from the evaluation and the student is repeatedly rejected from jobs. The student subsequently finds out that Company ABC's reference is the reason for his unemployment situation. Is Company ABC facing potential liability?

Analysis

Whether Company ABC is liable depends on a variety of factors. The primary causes of action, however, that may be brought by the student are for defamation or tortious interference with business contracts. Depending on the circumstances, there may also be liability for claims of discrimination, retaliation, or providing a "negligent referral."

To maintain a cause of action for defamation, the student must establish that the reference contained false and defamatory material and that it was communicated to a third person. For a statement to be deemed "defamatory," it must harm an individual's reputation and lower him or her in the esteem of the community. Courts have indicated that such a statement must result in some tangible harm to the person (e.g., loss of money, business, or employment). In addition, a substantially true statement may be defamatory if it is incomplete and misleading.

Generally, courts rarely determine that statements pertaining to job performance are defamatory—unless an employer falsely accuses an employee of criminal conduct, lack of integrity, dishonesty, incompetence, or reprehensible personal characteristics or behavior. In the example, Company ABC has repeatedly informed other potential employers about the student's incompetence, so there is potential liability associated with the reference. Company ABC has an escape hatch, however, if it has documentation to support the statement's veracity.

Qualified Privilege

If an employer can establish a qualified privilege between former and prospective employers, even if statements made about the student are false, it can escape liability. Thus, the qualified privilege for referring employers exists provided the speaker makes the communication in good faith and has a public or private duty; or has a legal, moral, or social obligation to do so. Additionally, the prospective employer receiving the information must possess a corresponding duty or interest in the communication.

However, a statement loses its privileged character if the communicator is motivated by ill will, demonstrates excessive communication of the statement, or conveys the statement without grounds for believing it to be true. An employer or educational institution may be protected by a qualified privilege concerning an employee when disclosing information is necessary to serve the employer's legitimate interest in an employee's fitness to perform.

Further, the majority of states have adopted specific legislation that protects an employer's disclosure of information about former employees. In this regard, generally, provided such statements are based upon a reasonable investigation of the facts, the disclosure of information will be protected by the applicable laws.

In the example, Company ABC had a legitimate interest in assessing and disclosing the employee's ability to perform for future employers. Provided such assessments of the student were not motivated by ill will or communicated to individuals not privy to such information (i.e., telling the janitor about the employee's performance), Company ABC should not lose the qualified privilege regardless of the accuracy of the statements.

Therefore, Company ABC should not be liable for disclosing the communication to prospective employers. However, Company ABC also disclosed this information to the career center and the student adviser. What happens if the student adviser subsequently discloses this information to a potential employer in a reference letter requested by the student?

The student adviser's primary defense is that the statements provided were true. Even if the student adviser did not verify the allegations, he or she can still avoid liability. While courts have not generally addressed the "qualified privilege" argument for such a disclosure, nor if the "employer privilege" would apply, an argument could be made that the adviser would not be liable for defamation. After a referral source claims the privilege, the student must establish that the statement was made for malicious purposes. The referral source will not be liable for sharing information he or she had a reasonable basis for believing. As courts have indicated, it is in the public interest that information regarding an employee is readily available to the prospective employers.

Here, the referral source—the student adviser—had a reasonable basis for believing the evaluation. The student worked for the individual providing the evaluation, and the evaluation came directly from the employer, not a third party. The student adviser should be able to maintain immunity from a claim for defamation.

Based upon the foregoing, it is difficult for a student to maintain a cause of action for defamation in the employment arena. The student must prove that the statements made were intentionally false and made with ill will to overcome the immunity provided by the majority of courts.

Tortious Interference

The second cause of action is tortious interference. This is significantly more difficult to establish for the student intern in the example. To maintain a cause of action for tortious interference, the student must establish that he or she had a reasonable expectation of entering into a valid business relationship, the employer or educational institution knew of the expected relationship, and that the employer or educational institution purposefully interfered with and prevented the relationship from occurring.

Courts have routinely stated that merely providing a negative reference will rarely lead to a cause of action. As with defamation, the student must establish that the employer or educational institution provided the negative reference out of spite or ill will. If such elements are not present, there is minimal chance of recovery against the referral source.

Discrimination and Retaliation

Another potential pitfall for referral sources lies with anti-discrimination laws. Title VII (which prohibits race, religion, national origin, and gender discrimination), the Americans With Disabilities Act, the Genetic Information Nondisclosure Act, and the Age Discrimination in Employment Act prohibit discrimination in employment. The laws also prohibit retaliation against individuals who engage in a protected activity.

Regarding retaliation, if the student intern from the scenario complained about discrimination or harassment while employed, he or she has now engaged in a "protected activity." If Company ABC subsequently provides a negative reference to prospective employers, the student may bring a cause of action against the company for retaliation pursuant to the anti-discrimination laws. The burden then shifts to Company ABC to provide a legitimate, nondiscriminatory reason for giving the negative reference. It is imperative that a referral source maintains proper documentation if it provides a negative reference for any individuals, specifically those who have engaged in a protected activity.

While, at this time, there is no specific case law dealing with the presented scenario as it pertains to references provided by educational institutions, students are afforded similar protections. Should a student lodge a harassment or discrimination complaint against a career center or faculty member and subsequently receive a negative reference, the educational institution would be exposed to potential liability. Accordingly, educational institutions should base all references on facts that can be supported by documentation.

Moreover, references should not disclose any "protected" information, such as an individual's race, religion, gender, genetic information, sexual orientation, national origin, age, or disabilities. Information that would be considered personal, such as economic status, parental/marital status, or any type of information, which, if disclosed, would be considered an invasion of the person's privacy, should not be disclosed.

Employers and educational institutions should also maintain uniformity when dealing with references. Policies and procedures should be implemented to ensure that all requests for references are dealt with in a similar manner for all individuals regardless of race, gender, religion, genetic information, sexual orientation, age, disability, national origin, or any other protected class. The foregoing policies, however, must be uniformly applied to all reference requests. In this regard, an employer or educational institution may not pick and choose to whom to provide a reference. If a policy is not uniformly applied, it may open up the employer or educational institution to a cause of action for discrimination.

Negligent Referrals

If employers and educational institutions were not already worried enough about providing information in a reference, there is also potential liability for failing to provide information that should have been disclosed.

Simply, a cause of action for a "negligent referral" arises when an employer fails to disclose information about a former employee that then leads to an injury or an incident involving a third party. By way of example, instead of issues with performance, Company ABC terminated an employee's employment for severely assaulting a co-worker. Company ABC is subsequently contacted by a potential new employer for the employee requesting a reference. Instead of disclosing the assault, Company ABC informs the potential employer that the employee merely had "performance issues." The potential employer hires the employee, who then assaults a co-worker at his new job. Company ABC is now potentially liable for a negligent referral.

The same theory of liability can be passed to the educational institution. If, in the above example, the employee was a student performing an institution-sponsored internship, the educational institution may become aware of the student's dangerous behavior through the employer. If the educational institution fails to disclose such information when requested, it may be held to the same liability as Company ABC.

Generally, a negligent referral case does not apply to a failure to disclose poor performance, but to significant issues at work (i.e., harassment, discrimination, or dangerous behavior). Accordingly, referral sources need to worry not only about what they do say, but also what they fail to disclose.

Family Educational Rights and Privacy Act

Faculty or other school personnel who are asked to give references have an additional duty under the Family Educational Rights and Privacy Act (FERPA). FERPA requires that federally funded institutions, under programs administered by the U.S. Department of Education, comply with certain procedures on disclosing and maintaining educational records. FERPA was not enacted to preclude the disclosure of educational records simply because the records identify a student by name; rather, it was designed to protect the student's educational information and status as a student.

FERPA prohibits the disclosure of a student's protected information to a third party, thereby prohibiting the disclosure of educational information to potential employers without the prior approval of the student or parent. This includes, but is not limited to, information such as records, files, documents, and other materials maintained by an educational agency or institution, or by a person acting for such agency or institution.

According to FERPA, a student is defined as an individual who is enrolled in and actually attends an educational institution. The regulations provide that attendance includes, but is not limited to, attendance in person or by correspondence. Courts have held that individuals who merely audit classes or who are accepted to an educational institution but do not attend any classes are not "students" for purposes of FERPA. A student also includes individuals who "attend" classes but are not physically located on a campus. The foregoing includes students who attend classes by videoconference, satellite, Internet, or other electronic information and telecommunications technologies.

With respect to reference letters and resumes, the critical inquiry is whether these records include or incorporate the student's "educational information" (i.e., GPA, grades, social security numbers, evaluations, and so forth). If these documents contain "protected" educational information, they cannot be disclosed without satisfying FERPA's pre-disclosure requirements. As such, an educational institution may not provide an employer, headhunter, or other employment agency with a student's resume or confidential letter of reference that contains protected educational information unless it first obtains approval from the student or the student's parent.

FERPA further requires an educational institution to grant students access to their educational records, including letters of recommendation. A student may waive the right to access confidential letters of recommendation. Such a waiver must be in writing. Should a student provide a waiver to the institution, this should be explicitly stated in the letter of recommendation itself.



Referral sources should be mindful of any information that is provided to potential employers. Any negative information may put an individual or entity on the defensive, especially if it costs someone a position.

Consider these quick tips when providing references and referrals:

  • Prior to providing a reference, obtain written consent from the person about whom the reference will be given.
  • Develop policies and procedures about providing references, including, if possible, designating specific individuals to provide references.
  • Employers are encouraged to provide only "necessary" information. This includes dates of employment, salary information, and position.
  • Disclose significant information (i.e., dangerous or harassing behavior) if supported by an investigation and documentation.
  • Follow your organization's policy regarding providing a reference.
  • Avoid lunch discussions or "off the record" telephone conversations with prospective employers regarding a person's performance.
  • Be mindful of what is placed on social media (i.e., Facebook, Twitter, and so forth).
  • If you are unaware that the job applicant has named you as a reference, ask the prospective employer for verification that the person has given consent for the reference.
  • Provide only factual information, based upon personal knowledge/observation of the person through direct contact with the person or obtained from the person's personnel record or student record.
  • Respond to direct and specific inquiries about the job applicant as per your organization's policies and procedures. Direct the response to the person who requested the information.
  • Relate the reference to the specific position for which the person applied and the work that the applicant will perform.
  • Do not provide subjective statements or opinions; only provide factual information that can be substantiated.
  • Maintain uniformity with referrals. 

blank default headshot of a user George C. Hlavac, Esquire, and Edward J. Easterly, Esquire, are attorneys in the Labor and Employment Law Department at Norris, McLaughlin & Marcus, P.A.

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