Aug 05, 2008

Glowing Reference + Dangerous Former Employee = Potential Liability

Giving references for an employee your company fired can be a very tricky business. If your company goes beyond the standard "name, rank, and serial number" approach -- typically, confirming only the dates the employee worked for the company, positions the employee held, and perhaps salary information -- you might be worried about a lawsuit from the former employee. Even though many states have laws that protect former employers from defamation claims based on a good-faith reference, you have to be careful not to go beyond information you know or reasonably believe to be true.

But courts are finding that it's just as bad to give a falsely positive reference for an employee who is actually dangerous. More than ten years ago, for example, the California Supreme Court found that an employer that chooses to give a detailed reference for a former employee has a duty not to misrepresent the facts. In that case, a female student at a California middle school claimed she was sexually molested by the vice principal, and sued his prior employer based on its glowing letter of recommendation; in fact, he had been accused of sexual misconduct and impropriety with students in his former job, as well. The Court allowed the case against the former employer to go forward.

A recent case from the Fifth Circuit Court of Appeals has facts that are similarly dreadful -- and a similar outcome. In that case, an anesthesiologist was fired for abusing Demerol on the job; his termination letter stated that his employment had been terminated for cause for reporting to work in an impaired condition and putting patients at risk. Nonetheless, he received positive reference letters from two of the doctors in the partnership that had fired him, stating that he would be an asset to any anesthesia service, was an excellent clinician, and was recommended highly. No mention was made of his drug abuse.

In his new position, the anesthesiologist failed to resuscitate a patient who was in for routine surgery; the family of the patient -- who ended up in a permanent vegetative state -- sued the new employer. The new employer, in turn, sued the former employers for misrepresentation. The Court of Appeals found that the former employers had no stand-alone duty to disclose the employee's drug abuse; once the doctor-owners provided a reference, however, they had a duty not to affirmatively misrepresent the facts. Because their referral letters were false and misleading, they could be partially liable for the patient's injuries.

For information on what to tell prospective employers about a former employee, see Nolo's article Giving References for Former Employees.