What are companies allowed to say regarding former employees on reference checks?

In response to the blog we posted yesterday, a reader asked what the legal boundaries are regarding what a company is allowed to share via professional references.  We asked Attorney Kenneth J. Rossetti, a contributor to our blog, to respond to that question.  Here is Ken’s response:

That is an excellent question.  As a preliminary matter, different states may have different laws (and perhaps conflicting laws) with respect to furnishing employment references on behalf of former employees.  I am therefore limiting this response to Massachusetts.

In Massachusetts, there is no law or statute prescribing what companies may indicate in furnishing an employment reference with respect to a prior employee; however, stating false information about a prior employee may subject the employer, and the individual furnishing the reference, to one or more causes of action, including defamation (making a false statement of fact about someone to a third party, which statement would tend to make the subject of the statement viewed negatively by the local community) and wrongful interference with the former’s employee’s relationship with the new (or prospective) employer.

Civil liability may also arise if the reference contains misleading (although not necessarily false) information about a prior employee, and/or if the reference includes information that is protected from disclosure under privacy laws (for example, medical records/information concerning the prior employee).  Massachusetts citizens also enjoy a statutory right of privacy, under which “[a] person shall have a right against unreasonable, substantial or serious interference with his privacy.”  Massachusetts General Laws, Chapter 214, Section 1B.

Employers must therefore be guarded regarding what they indicate in a reference for a prior employee.  Indeed, it is good practice for an employer to furnish reference information only upon receiving a written request for a reference.

Massachusetts employers – though not technically barred from furnishing negative information about prior employees if that negative information is accurate – typically limit references to confirming the fact of the prior employee’s employment, the prior employee’s dates of employment, and (sometimes) the prior employee’s job title(s), if any.  Under these “plain vanilla” references, prior employers will not furnish the reason(s) for separation, even if the former employee separated through no fault of his or her own (such as through a layoff or reduction in force); similarly, prior employers will not give the reason(s) for separation, even if the prior employee was terminated due to the employee’s own wrongdoing.

The information furnished in an employment reference may also be governed by any employment contract, and/or or severance agreement, that the prior employee entered into with the prior employer.  For example, an employment contract may specify a “plain vanilla” employment reference upon the contracting employee’s separation, notwithstanding the reason for the separation; under that scenario, a prior employer’s failure to abide by that contractual provision may subject the prior employer to civil liability for breach of the employment contract.

Similarly, a severance agreement may specify the content of an employment reference, either through an agreed, accurate statement that shall be furnished to the reference seeker or through a truthful letter of reference.  Indeed, it is not uncommon, as part of the severance package, for the employer and the to-be-severed employee to agree upon an accurate letter of reference that may be furnished by the severed employee to prospective employers, particularly if the severance arises through no fault of the departing employee.

This scenario often presents a “win-win” opportunity for the employer and employee – as most employers typically only furnish plain vanilla references, a letter of reference (particularly a praiseworthy letter of reference) may set a job candidate apart from other applicants (principally those lacking a letter of reference) and thereby facilitate gaining future employment.  For the employer, furnishing a letter of reference in a severance package can often be bargained for in place of some remuneration or other benefit, and thereby helps to preserve the “bottom line” (an important consideration if the bottom line prompted the separation of the severed employee).

Keep in mind that a prior employer’s violation of a severance agreement provision on an employment reference can subject the prior employer to civil liability for breach of the severance agreement.

In sum, while Massachusetts does not expressly prescribe what a prior employer may state in an employment reference on behalf of a prior employee, there are many reasons, set forth above, why Massachusetts employers typically furnish “plain vanilla” employment references.  As different states may have different laws or rules regarding employment references, readers should consult with an attorney licensed to practice in their particular state should legal assistance or a legal consultation be necessary in connection with an employment reference or other employment matter.

Attorney Ken Rossetti has been a licensed attorney in Massachusetts since 1997. Ken is not affiliated with Treeline, Inc., and this article, furnished for informational purposes only, does not constitute legal advice.  Please seek legal counsel if you have questions about employment law or any other legal matter.