Can a Former Employer Give a Bad Reference? How To Determine When It's Illegal

In most cases, it’s permissible for a previous employer to share truthful information about a past employee with a new employer. The law supports giving honest opinions about how someone worked, whether positive or negative. If an employer goes too far and tells lies, it could be a violation of defamation laws. Defamation laws make it illegal to knowingly share false information about a former employee when giving a reference to a potential employer.

This article provides an overview of when a former employer’s bad reference is illegal. It also explains your options.

Employer Defamation: Facts, Falsehoods, and Opinions

A bad reference from a former employer can torpedo a job seeker’s chances of landing a new job. Straying from the truth by a prior employer can make a bad reference illegal, but there are practical challenges with any defamation case. These can be heightened in the context of job references.

Discovering the reason a job applicant was denied is difficult, as job seekers are rarely notified of the reason they were not hired. As a result, the applicant might be left in the dark about negative reference checks from a past employer.

Some states have stricter rules against retaliation or giving inaccurate references about a former employee. For instance, under the California Labor Code, it’s considered a crime if a former employer, through disseminating false information, tries to stop their ex-employee from getting a new job. Retaliatory comments and untruthful statements are always illegal, but a “bad reference” is not unlawful if it’s true.

Company Policies on References: Ask, but Don’t Tell

It’s common for companies to have policies that prevent human resources (HR) representatives from sharing information when a prospective employer asks about a previous employee. They might confirm that the person worked there and share the dates they started and finished, but offer little else. Many companies do this to avoid legal issues or problems with former employees.

The downside is that employees with great records might not get a helpful reference. Even worse, future employers may have concerns if a past employer doesn’t give a positive reference. While not ideal, these policies are legal.

This fear of giving negative referrals can lead employers to pass along bad or dangerous employees. Cases of employees with histories of theft or sexual harassment repeating their behavior in new positions have resulted in employers refusing to give any references except confirmation of employment.

Qualified Privilege: The Employer’s Defense

Your former boss has a legal defense against defamation if they give you less than a good reference. The “qualified privilege” defense protects them if they give a prospective employer a bad job reference.

To have qualified privilege, the employer must meet specific legal elements.

• They must give the information in good faith and believe it’s both true and relevant
• The information must be given to someone with a legitimate interest in the employee’s work history
• The scope of the referral cannot exceed the employee’s work time and job duties

For instance, an employer can’t discuss what a worker did during their off time or share information with someone calling from the media or a local newspaper. Negative opinions have qualified immunity if they draw from the employer’s own knowledge, but not if they are based on someone else’s opinions.

The employer does not have absolute immunity to say whatever they wish to another company’s HR department. The employee can defeat the privilege if they can show that the employer acted in bad faith, lied, made false statements, or disclosed the information to someone with no reasonable interest in it.

For example, a former employer telling another company’s HR department that you were fired for missing too many days at work is fine if it’s true. Telling them they heard you were part of a motorcycle gang in their off time violates all the protections for immunity.

How To Know if You Have Bad References

Even with today’s social media interactions, it can be nearly impossible to know if an employer has given you bad references. If you left your previous employer on good terms, it’s unlikely they will give you negative referrals. After an acrimonious split with your former job, being repeatedly shot down in the final stage of the job-hiring process might be due to negative references.

There are agencies that will make test calls to see what your references are saying. Your former HR department may have rules against providing references beyond job title and dates of employment, which you may need to confirm.

If you have someone call for you, look for these warning signs:

• Former employers refuse to confirm whether you would be rehired
• The reference check is vague, cold, or scripted
• The reference contradicts your resume or interview

If you’re receiving bad references for no apparent reason, it might be time to get legal advice from an employment attorney.

State Law Considerations

Blacklisting is the practice of preventing someone from obtaining employment by placing them on a list accessible to other employers. Once on this “blacklist,” employers will not hire the worker. Blacklists date back to at least the early days of union-busting and are unethical at the least. In some places, the practice is illegal. Currently, 23 states have some form of blacklisting law or statute on the books.

Some states allow employees to request disclosure of employer references. In other words, you can ask to know what your employer told your prospective employer when they called. A few states require former employers to submit service letters stating the reason for termination if you were not given one.

Legal vs. Illegal References

Everyone likes to think they deserve a good reference, but what can your former boss tell a prospective employer without violating your rights? In general, anything related to your job performance is fair game, whether good or bad, as long as it is true and based on facts or personal observation. Anything not truthful, personal information, medically related, or hearsay is off the table. Here are a few examples:

• Legal: “John was fired for missing deadlines on three consecutive projects.”
• Illegal: “John was fired because his co-workers said they had to finish up his projects for him.”
• Legal: “Karen was terminated after we discovered she embezzled $50,000 from the firm.”
• Illegal: “Karen was terminated because nobody knew where she got all the money for that new car, so we figured she had to be stealing.”
• Legal: “We had to let him go for violating the State Bar’s Professional Conduct rules.”
• Illegal: “He was a total sleaze and always sleeping with his clients.”
• Legal: “We would not rehire this person.”
• Illegal: “Don’t fire him, he’ll sue you too.”

Negative references must be true and related to the employee’s job performance.

What You Can Do

If you’re getting bad references, your legal options may be limited. Defamatory references can provide you with legal recourse under tort law, but can be difficult to prove. If you have confirmed that the reference was intentionally negative, contact your former employer or the HR department and ask about the reference policy.

Your safest course of action is damage control. If you know an interviewer will contact previous employers who may provide a negative reference, get ahead of it by explaining your side of the story.

If you believe you’ve been blacklisted, contacting an employment attorney is a good idea. File complaints with your state labor board and consider legal action under your state’s blacklist laws, if any. Litigation should be a last resort, but if your employee rights have been violated, you have legal recourse.

Retaliatory References

Sometimes a bad reference is little more than petty vengeance. If you reported a violation to OSHA, filed a complaint with EEOC, or appealed a workers’ compensation denial, you might be facing retaliation, which is illegal.

Retaliation against an employee for exercising federally protected employee rights differs from an ordinary bad reference. These laws provide separate and stronger protections for workers than state blacklisting and civil defamation laws. For instance, the Federal Whistleblower Protection Act provides employees with back pay, benefits, expungement of disciplinary action, possible civil awards, and more.

Anyone facing possible retaliatory action is in a different category than someone merely facing bad references from an angry boss. Contact a civil rights attorney for these situations and legal help.

Concerned About Employment Laws? Talk to an Attorney

If you believe your former employer violated employment laws by misrepresenting your employment history, you may want to explore legal action. An experienced employment law attorney can determine whether a legal recourse for defamation arises from your former employer’s reference. They’ll examine the specifics of your case, explain your options, and represent you if a lawsuit is the best way to go.