Reference Checking: When You’re the One Being Asked for a Reference (Part II)

Checking references is an important part of the hiring process. These are legal issues to consider.

This is the fourth in a series of articles on checking references as part of the selection process and the second one aimed specifically at reference providers. It is based on the Merit Systems Protection Board (MSPB) Special Report, “Reference Checking in Federal Hiring: Making the Call,” which opined that the “reference provider should cooperate with reference checking inquiries while remaining carefully inside the legal boundaries outlined in this report.”

I will focus in this article on what the report refers to as the “three main legal issues that must be considered by reference providers,” which are: “liabilities arising from:

(1) defamation claims;

(2) claims for injuries caused by employees who were hired on the basis of negligent referrals; and

(3) claims that non-selection of an applicant was based on misuse of performance records. The report cautions that “Reference providers must act appropriately to avoid charges of defaming applicants or giving ‘negligent referrals’ to prospective employers. Federal employees also must exercise care when they consult official performance records during reference checking discussions.”

Defamation Claims

The MSPB Report defines defamation as “the act of harming the reputation of another by making a false statement to a third person.” It notes that “This can happen in reference checking if reference providers discuss aspects of an applicant’s personal life that are not job-related, if they maliciously and knowingly provide false information, or if they share employment information with someone who does not have a legitimate business need to know. Any of these activities can lead to a defamation claim by an applicant…”

The report advises that “Reference providers act responsibly by ensuring that they provide accurate information. It is acceptable to give opinions about an employee’s performance and competence, so long as they are honestly held opinions. It is best to keep opinions ‘close to the facts’ by offering an example from personal experience to support evaluative statements. (‘Brian had poor organizational skills. His desk was an unstructured and unsightly mound of reports, memos, borrowed reference books and miscellaneous paperwork. He often lost important documents.’) All descriptions of performance and conduct should be based on work behavior.”

MSPB warns that “Reference providers should never make snide observations or malicious comments, even if it seems that such description will improve a potential employer’s understanding of the applicant.” The report notes that “Specialists recommend that reference providers confine their comments very closely to the questions they are asked. Extensive volunteering of negative information can be misinterpreted as maliciousness.”

These precautions “seem to be effective,” noting that research conducted by the Society of Human Resources Management (SHRM) “found that fewer than 2 percent of organizations they surveyed about reference checking practices have ever been targeted by applicant defamation claims.” Despite this statistic, the report says that many reference providers are still worried about legal consequences, leading about half to refuse to provide information about an applicant.

The defamation claims guidance in the MSPB Special Report is comprehensive. The salient points are:

1) Don’t disclose employment information to anyone who does not have a legitimate business need to know – which to me means you should verify that the reference checker is who he/she claims to be;

2) Tell the truth, which can include honestly held opinions, since truth is the first line of defense against a defamation allegation; and

3) Do not discuss aspects of an applicant’s personal life that are not job-related.

Negligent Misrepresentation

MSPB also addresses the little- known issue of misrepresentation, noting that “Under the theory of negligent misrepresentation, injured parties may hold a former employer liable for damages when, despite the reasonable efforts of a hiring official to investigate an applicant’s prior work behavior, the ‘former employer [fails] to disclose information about a former employee…[and this failure] leads to the injury of an innocent third party.’”

The report goes on to say that “Because agency officials providing a reference enjoy enhanced legal protection over their private sector counterparts as a result of sovereign immunity, former employers should feel reasonably comfortable in providing thorough and responsive references. As a brief note of caution, however, immunity is continually being challenged in the courts; therefore, it should not be cavalierly presumed that immunity will be found under every conceivable fact pattern. In any event, a feeling of immunity from legal attack should not be an excuse for acting irresponsibly. Indeed, former employers need to be responsive to appropriate reference checking inquiries to protect themselves, in addition to ‘doing the right thing’ to maintain general workplace safety and quality standards.”

I see a threshold question here: Are you responsible for providing information that a reference checker doesn’t specifically request? I think the answer is no. The major responsibility rests with the reference checker. If that person fails to ask a question(s) that could reasonably have been expected to elicit adverse information about the candidate, I don’t see how a reference provider could be blamed. If, on the other hand, the reference checker asked about the employee’s conduct and/or disciplinary history, and the reference provider was aware of relevant adverse information but failed to provide it, and an innocent third party was injured, I think he/she could be held accountable.

I will put this information into a “real world” context via the following hypothetical situation:

Suppose you are the former supervisor and receive a reference check call. You know that the candidate was disciplined for threatening a co-worker but you elect not to provide that information in response to the reference checker’s question about the employee’s behavior on-the-job. The candidate is selected for the position in question, but within a few weeks assaults a co-worker, causing serious physical injuries and emotional trauma. It is likely that management in your former employee’s new agency will be trying to find out what the former agency, and you in particular, as the reference provider, knew about this employee’s behavioral history. It is certainly possible that the “injured innocent third party” could file a lawsuit against you and that you could be found to have engaged in negligent misrepresentation.

Misuse of Performance Records

The MSPB Special Report states that “Reference checking specialists advise reference providers to check their files for past performance appraisals and other documentation associated with an applicant. A review of these records can help the reference provider offer accurate judgments and specific, documented examples of workplace behavior.”

The report goes on to caution that “such records must be used with care. Supervisors in Federal agencies must ensure that any use of official work-related documents is permitted by statute.” It advises that “Before using work-related documents to support the reference checking process, supervisors should research their agency’s routine use policy concerning the types of documents in question. If feasible, the reference provider should seek advice from an agency official knowledgeable in Privacy Act law. If the agency’s routine use policy does not specifically permit the release of such records as part of discussions with potential employers, supervisors are best advised to rely on their own personal records to support reference checking.”

Checking references is an important part of the selection process and that the reference provider should offer relevant information about the candidate in response to questions from the reference checker. MSPB offers excellent guidance about the role and responsibilities of the reference provider. You should augment that information by referring to your own agency’s policy, if any, and by seeking specific advice from your agency’s experts – meaning those in HR, EEO and Counsel’s office – if you have any question about areas that are legitimate for you to comment on, like the candidate’s job performance and conduct, versus those which may be inappropriate, such as the candidate’s off-duty activities or political affiliation.

About the Author

Steve Oppermann completed his Federal career on March 31, 1997, after more than 26 years of service, virtually all in human resources management. He served as Regional Director of Personnel for GSA and advised and represented management in six agencies during his federal career. Steve passed away after a battle with cancer on December 22, 2013.