Can you be sued over a bad reference?

When a business relationship ends on a sour note (or worse), the last thing you want to do is hear from — or about — the other party ever again. You definitely don’t want to pick up the phone and hear someone on the other end of the line asking for a reference for that person.

How do you handle this situation without getting sued for defamation? Here’s what you need to know:

  • Some states have laws that give immunity to employers when they’re giving a reference about a former employee. Massachusetts is not one of them. However, case law has held that disparaging comments from one company to another about an employee can be protected when the two companies share a business relationship and the statements are relevant.
  • Truth is not a complete defense against legal action. Under this state’s laws, you can be liable for defamation even when your statements about an employee are true and you intended no malice.
  • You need to have a plan for dealing with this situation. Experts recommend that you assign one person in your business to be responsible for references, and that you only give references in writing. Furthermore, you should decline to give a reference unless you have written permission from the employee in question.
  • Stick to the facts, and keep your documentation. Never offer your opinion of an employee’s character or abilities. Give factual information gleaned from their performance records, and make sure that you’re accurate.

Protecting your company against litigation isn’t easy in today’s world. If you find yourself uncertain about your rights or obligations, it may be time to get some legal assistance.


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