Termination

The traditional recommendation and the practice of most companies is to discourage their managers from providing references for former employees. Providing references has some legal risk. If a company provides a poor reference on a former employee which results in the employee not receiving a job offer, then the employee may sue for defamation. If the company only provides references for former employees who had a good performance record, those who don't receive the benefit of a reference may sue.

Instead, most companies just provide factual data such as dates of employment, job titles, and salary, and only provide this information with written authorization from the former employee.

On the other hand, there are also good reasons to give references, too:

• Reward a good employee
• Help get rid of a bad one
• Avoid negligent hiring claims
• Help control unemployment costs

In the unlikely event of a defamation lawsuit, several defenses are available:

• The statement given was truthful. This is an absolute defense.
• The employer can show an "absence of malice" (e.g. lack of spite, intent to harm, or ill will).
• The employee consented to your making a reference statement.

To be able to take advantage of an employee consenting to a reference statement, have the employee sign a consent form that releases you and the inquirer from all liability. A signed release form should state the kinds of information that your company might include in a reference. Be sure you know who you are talking to when you give references. Former employees can hire services to contact you and find out what you are telling other employers. Volunteer only information that is requested. Consult an attorney if you receive a reference request about an employee by has exhibited dangerous tendencies.