Most employers are all too aware of the danger of discrimination lawsuits, but there are many other legal threats in the HR arena. In today’s CED, California attorney and SPHR Allison West briefs employers on defamation, negligence, and fraud lawsuits.

West, principal of Employment Practices Specialists in Pacifica, offered her tips at SHRM’s Employment Law and Legislative Conference, held recently in Washington, DC.

Defining Defamation

In the HR world, defamation often rears itself in relation to references. What exactly is defamation? West notes that, first of all, it has to be a “false statement of fact.” So opinions aren’t defamation because they aren’t fact.

Some states offer a qualified privilege for those giving references (see below), so a statement also is not defamatory if it falls under the privilege.

The statement must be made about an employee, and it must be disclosed to a third person.

Finally, the statement must cause damage to the individual’s reputation, or expose the individual to public ridicule, shame, hatred, or contempt.

Truth Is a Defense

Remember, says West, that “Truth is a defense in defamation cases.”

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Proactive Best Practices for References

To avoid legal entanglements, employers should be proactive in dealing with references. West says that employers should start by ensuring that they maintain accurate and objective personnel files.

Then, obtain an authorization and a release from the employee before seeking a reference.

Also be sure to train supervisors and managers about your policies regarding the circumstances in which information may be released and which information may be released.

Make sure that managers and supervisors know to avoid actions that might be viewed as blacklisting (“You’ll never work in this town again”). Blacklisting is a criminal offense in some states—including California, notes West.

Finally, use caution when writing reference letters as part of a settlement, West says. It may be tempting to omit negative information, says West, but remember there is always the possibility of being sued for negligence for not revealing important information—for example, relating to violence.

Can We Talk ‘Off the Record’?

Inform your managers that there’s no such thing as “off the record” when it comes to references, says West.

Negligent Hiring

Employers have a duty to exercise reasonable care in hiring, West says. Negligent hiring suits may arise if employers hire someone with known dangerous traits, or if a reasonable inquiry would have discovered that the individual posed a threat to others.

What If I Hire Through Agencies?

Are you safe if you hire through agencies? Don’t they do a background check? Agencies make money by placing people, West says. When she asks employers, they usually say, “I think the agency does something.” That’s not good enough; find out what they do in the way of reference checks.

Fraudulent Promises

When employers make promises and then renege, it could bring a charge of fraud, West says. The standard would be that the employer intentionally deceived the employee concerning a material fact and that the employee reasonably relied on the false representation and was damaged.

West’s basic rule is simple: Be truthful. When you are “selling” a prospective employee, be sure to avoid overselling, West says. 
Avoid statements that might be considered as promises about job security, the stability of the company, careers, or compensation like these:

• “You’ll have a permanent job.” 
• “You’ll make a bundle on our stock option plan.”
• “Everyone gets promoted in their first year with us.”
• “I guarantee the following personal development actions.”
• “We have the most competitive salaries.”

In tomorrow’s CED, West’s tips for avoiding hiring-related lawsuits, plus an introduction to a comprehensive desk reference on discrimination and harassment – specifically for California employers.

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