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Can I Sue My Employer for Damaging My Reputation?

Yes, an employer is liable for knowingly or recklessly making false and defamatory statements about an employee that cause harm. Lawyers call this "defamation of character."

We will focus on two specific contexts. The first is in connection with a job reference. If a former employer makes statements in a reference that they know are false, the employee can sue if they aren't hired and can show that the reason they didn't get hired was the false reference.

The second is in connection with a performance review. Suppose an employer makes a false statement in a performance review that a co-worker with decision-making authority sees, and the employer knows that the statement is false. In that case, an employee can sue if they show they suffered economic harm.

What Is Defamation?

Let's start with some general background; then, we will dive into the employment context. What is "defamation"?

Defamation is a legal claim based on false factual statements that damage a person's reputation. There are two forms. If it's in writing, it's called libel. If it's spoken, it's called slander. If someone defames you and damages your reputation, you can sue them.

Although state laws differ, you generally have to show the following to make a defamation case:

  • Someone at least negligently makes a false factual statement about you
  • The statement harms your reputation (sometimes courts presume harm)
  • The statement is not privileged (meaning they didn't have a legal right to make it)

Next, let's address four defamation law issues that often arise.

Fact vs. Opinion

You can sue for a false statement of fact, but you cannot sue for an opinion. Determining which is which isn't always easy. Many defamation lawsuits turn on this issue.

You can see where the fight is. The plaintiff (the person doing the suing) claims a harmful statement is factual. But, the defendant claims that the statement, perhaps harmful, was their opinion.

The line courts have drawn isn't always clear, and depending on where you are, it's not always consistent. An experienced defamation lawyer in your state can tell you whether a particular statement is fact or opinion.

But recognize that lawyers — and judges — may disagree.

Defamation 'Per Se'

Showing harm to your personal or professional reputation is hard. But depending on the statement, you may not have to. There is a legal doctrine called defamation per se. According to this doctrine, some statements are so bad that a court will presume it damages your reputation if the statement is false.

Traditionally, there were specific, limited categories in which you could claim a statement was just that bad, such as:

  • You engaged in criminal activity
  • You engaged in sexual impropriety
  • You have a particularly nasty or infectious disease
  • You behaved in a way incompatible with your business's proper conduct.

Some states apply the doctrine broadly. So you should consult a local defamation attorney to see if it applies to any statement.

Privilege

A third issue is privilege. There are two types of privilege: absolute privilege and qualified privilege.

Some statements you can make with absolute privilege. That means you can say any false and harmful thing you want without fear of a lawsuit. For example, legislators' statements on the legislature's floor are privileged. It doesn't matter what they say, true or not — good faith is irrelevant. Defamation rules differ for public figures and some public comments.

Contrast that with what's called qualified privilege. In some contexts (including the employment context we discuss below), you can't sue for defamatory statements unless the publisher knew the statement was false or acted with reckless disregard for the truth (sometimes called "actual malice"). If the statement is privileged, you can't sue for it, even if it harms your personal or professional reputation.

Damages

A fourth issue is damages. Unless a statement is defamatory per se, you need to show that the statement harmed your reputation. There are four categories of damages you can recover:

  • Nominal damages (a small sum, often one dollar, for defamation per se where you can't show actual harm)
  • Actual damages (compensation for past and future harm, including emotional distress)
  • Special damages (compensation for specific economic loss, such as lost wages)
  • Punitive damages (damages intended to punish a wrongdoer for particularly egregious behavior).

Again, a local defamation attorney could help you better understand what precise damages are available in your situation.

Defamation in the Employment Context

Let's now turn to the employment context. Under defamation law, an employer is liable for the reputational harm caused to an employee if they publish false, unprivileged statements about them.

As suggested above, most states recognize a qualified privilege for employers to talk about employees and former employees to prospective employers, other employees, and the authorities. The employer loses that privilege if:

  • They make a statement knowing it's false or with reckless disregard of its truth (actual malice) or
  • They know or should know that there is no legitimate interest in the recipient receiving the false statement (what makes up a "legitimate interest" depends on where you are).

With that background, we will turn to two common employment defamation scenarios.

Employment Reference

The first, and perhaps most common, is the employment reference context. Suppose your employer thinks you stole someone's yogurt out of the refrigerator in the company lunchroom. Believing you are dishonest, the company fires you. There was no investigation, nothing. You're just fired.

You didn't take the yogurt but decided that you didn't like the job anyway. So you don't take legal action and instead apply for a new position.

Your prospective employer likes your resume and schedules an interview. That goes great. At the end, the interviewer tells you they want you for the job, but to dot the Is and cross the Ts, they ask for references. You give them the name of your former employer, who tells them they fired you because you are dishonest. You don't get a new job.

Establishing the Elements of an Employment Reference Defamation Claim

Although it depends on the state, you may have a defamation claim against your former employer. You could establish that it made a false statement and that you didn't get the job as a result (harm). If the interviewer wasn't willing to testify why you didn't get the job, you might be able to rely on defamation per se, given that yogurt theft is a crime and, at the very least, reflects poorly on your business conduct.

Fact vs. Opinion in the Employment Reference Context

The wrinkle here is fact vs. opinion. Your employer would argue that your "dishonesty" was a statement of opinion, not necessarily fact and that you couldn't sue. At first blush, that may look right.

But it depends on the state. Many will allow you to sue for statements that look like opinions on their faces if they come from false information.

In our case, the employer's statement relies on nothing more than the false accusation that you stole the yogurt. Whether you stole the yogurt is a fact — you either did it or you didn't. In some places, you could sue your former employer for defamation based on the false statement that you are dishonest. Because your success depends on what your state law is, make sure you check with an experienced employment lawyer in your area.

Employment Review

A second context in which defamation may arise is during a job review. Suppose a co-worker above you in the food chain sees a review of you that your boss wrote. Sticking with the yogurt example, say that the review said you are dishonest, mistakenly believing you stole a yogurt. Let's also say you are up for and expecting a promotion from your supervisor, and you don't get it.

Assuming you can show that you didn't get the promotion because of the review — causation is often a challenge in defamation cases — you may be able to sue your boss for workplace defamation. Again, the statement is false, even though it's couched as an opinion. It caused you harm because you did not get the promotion. So you may have a defamation case.

Consult a Lawyer About Employment Defamation

The law protects you from your employer intentionally or recklessly making false statements about you to prospective employers or other employees that damage your reputation. You can sue if your employer defames you.

You have a limited time to file a defamation lawsuit. The statute of limitations for defamation claims can be as short as one year (and if it's a slander claim in Tennessee, only six months), so you must act quickly.

If you believe someone has defamed you in connection with your employment, get legal advice from a defamation or an employment law attorney in your area.

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