Avoid These Pitfalls When Writing a Reference for a Dismissed Employee

Financial Post: May 13, 2014.  All Rights Reserved.

Many employers worry that if they fail to provide a dismissed employee with a deserved reference, additional damages could follow. That concern is not without warrant, but careful thought should go into writing that reference.

If the lack of a reference leads to longer unemployment, the courts often compensate the employee for that. As well, courts, either expressly or otherwise, sometimes punish employers for refusing to provide a reference to an employee deserving of one. Quite practically, employers also realize, if the reference results in quicker re-employment, there will be less potential damages for the former employee to sue for.

For all of these reasons – some well-intentioned, others less so – employers often dash off letters of reference to employees, deserving or not, with little thought, hesitancy or foresight.

But the rise of negligent referencing and defamation claims in the United States and Britain in recent years is causing some to readjust their way of thinking.

Canadian employers need to be beware of the some of the pitfalls. If, for example, you deliberately make a false statement about a dismissed employee that negatively affects his or her reputation or re-employability, you may have defamed the employee and be liable for damages. However, proving your comment was deliberate can be difficult. Unlike their U.S. counterparts, Canadian employers are protected from defamation arising from references and employee evaluations if they honestly believe their statement to be true.

That may be why, while some employers are too quick to dash off references, others are too reluctant. This is particularly the case with U.S. subsidiaries whose practises are informed by those south of the border.

The larger risk for Canadian employers is negligent misrepresentation. If a prospective new employer relies upon a favourable letter of reference that was negligently drafted and inaccurate, they may look to recover damages. Employers should never provide a reference for employees fired for cause. Similarly, although not liable for defamation, if an employer’s reference is provided negligently, with little forethought or care, and the employee loses a job as result, they may have a suit against the former employer.

If you have fired an employee for cause, beware of receiving reference calls from purported new employers seeking positive references. Such calls are generally not for the purpose of a job, but to make it difficult for the employer to later maintain, even justified, allegations of cause based on incompetence or misconduct. Your goodwill should never entrap your reason or skepticism.

Employers providing references for a dismissed employee would be wise to heed the following:

– Be honest in drafting reference letters and do not act with malice or the intent of interfering with the employee’s ability to find a new job. This will protect you from a defamation suit.

– Obtain consent from the former employee to provide a letter of reference and to answer reference related questions from a prospective employer. Establish the boundaries and don’t go beyond them.

– Generally, avoid negative comments although there is no legal liability if what you say is accurate, balanced and representative.

– Do not endorse (and enact a policy ensuring management does not endorse) employees through social media sites or otherwise when a former employee is dismissed for cause.

– Have a policy prohibiting references being provided by anyone except a designated individual who will review the file and consult, as necessary before doing so.

Review: Avoid These Pitfalls When Writing A Reference For A Dismissed Employee

This article by Howard Levitt titled Avoid these pitfalls when writing a reference for a dismissed employee brought forth several interesting tales from readers.

One reader mentioned a case related to a gentleman who, while employed by a rather large corporation, was promoted to the head of their Special Investigation Unit (SIU). During his term of employment, he conducted investigations and advised senior management of his findings and subsequent recommendations. The latter being whether or not a [say] employee should be terminated for cause.

For reasons not disclosed by the sender of the case, a background check was conducted on the head of the SIU a few months after his appointment wherein it was found that the gentleman was promoted while he was serving time for fraud and uttering during the weekend. It was also found that he did not have the background required for the position to which he was promoted.

Another reader wrote in about a case they worked on a few years ago. The case concerned the theft of approximately $3,000 in cash. After a lengthy investigation of several weeks the investigators focused their attention on one woman in her twenties who, while earning a rather low monthly salary, managed to acquire some extremely expensive clothes. During her interview/interrogation she confessed to the theft and then asked if she could get a reference. Her employer refused so she called up a co-worker who didn’t know what to do but wisely ignored the request. It appears that the perpetrator had perpetrated a theft of approximately $5,000 from her previous employer and they had provided her with a reference upon which her current employer relied up when then hired her.

We encourage readers to share so that their experiences can aid others.