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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.

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

The second is in connection with a performance review. If 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, an employee can sue if they can show that they suffered economic harm as a result.

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 states laws do differ, you generally have to show the following to make out a defamation case:

  • Someone at least negligently makes a false factual statement about you
  • The statement harms your reputation (depending on the statement, harm may be presumed)
  • The statement is not privileged (meaning they didn't have a legal right to make it)

Next, let's address four issues in defamation law that often come up.

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. In fact, many defamation lawsuits turn on this issue.

You can see where the fight is. The person doing the suing claims that a harmful statement is factual. On the other hand, the party being sued claims that the statement, perhaps harmful, was nonetheless 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 would be able to give you legal advice about whether a particular statement constitutes fact or opinion.

But recognize that lawyers — and judges — may disagree.

Defamation “Per Se"

Showing harm to your personal or professional reputation can be 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 that it damages your reputation if the statement is false.

Traditionally, there used to be 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 that was incompatible with the proper conduct of your business.

Some states apply the doctrine more broadly, however, so you will want to consult with a local defamation attorney to see if it applies to any given 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 being able to be sued. For example, statements legislators make when on the floor of the legislature are absolutely privileged. Doesn't matter what they say, true or not — they cannot be sued for them. Good faith is irrelevant.

Contrast that with what's called qualified privilege. In some contexts (including the employment context we discuss below), you cannot sue for defamatory statements unless the publisher knew the statement was false or acted with reckless disregard for the truth (in some places, this is called “actual malice"). If the statement is privileged, you cannot 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 may be able to 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 the loss of a job)
  • Punitive damages (damages intended to punish a wrongdoer for particularly egregious behavior).

Again, a local defamation attorney would be able to help you better understand what precise damages may be 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. However, 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 constitutes a “legitimate interest" depends on where you are).

With that as 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 to be dishonest, they fire you. No investigation, nothing. You're just fired.

In fact, you didn't take the yogurt, but decide that you didn't like the job that much anyway. So you don't fight it 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 that they want you for the job, but just to dot the Is and cross the Ts, asks for references. You give them the name of your former employer, who tells them that you were fired because you are dishonest. You don't get the 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 they 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 weren't hired, 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 therefore you couldn't sue. At first blush, that may look right.

However, it depends on the state. Many will allow you to sue for statements that look like opinions on their face if the underlying information they are based on is false.

In our case, their so-called opinion is based on nothing more than the false accusation that you stole the yogurt. Whether or not you stole the yogurt is a fact — you either did it, or you didn't. So in some places you would be able to 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 employment context in which defamation may come up is in the course of 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 states that you are dishonest, mistakenly believing that you stole a yogurt. Let's also say that 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 and even though it's couched as an opinion, it is rooted in false factual information. You were harmed by not getting 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.

But you have a limited time in which to bring 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 will want to act quickly.

If you believe you have been the victim of defamation in connection with your employment, get legal advice from a defamation or an employment law attorney in your area. 

Next Steps

Contact a qualified employment attorney to make sure your rights are protected.

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