Addressing the Cloud over Employee References: A Survey of Recently Enacted State Legislation

Article excerpt

A recent survey by the Society for Human Resource Management found that sixty-three percent of personnel managers refused to provide reference information about former employees to prospective employers.(1) Prompted by fear of lawsuits from disgruntled employees, many employers have adopted a "name, rank and serial number" approach to references, confirming only employees' dates of employment and job titles.(2) Several problems are inherent in this approach. Without complete references, prospective employers are forced either to hire prospective employees without the information necessary to make informed selections or reject employees and select other, potentially less desirable candidates. In the process, good candidates may be unable to secure jobs as a result of their past employers' reference policies.

This problem has not gone unnoticed by state legislatures. The threat of increased legal action and the current inability of employers to obtain references on prospective employees prompted employer groups and human resource professionals to call on state legislatures to "lift the cloud that hangs over reference-checking."(3) In an effort to increase the free exchange of references, at least twenty-six states now provide some type of statutory immunity for employers when they provide a reference.(4) Prior to 1995, only five states had such laws.(5) This Note examines the nationwide trend towards employer immunity.

Numerous factors influence employers' decisions to provide references. Traditionally, employers were concerned about defamation suits.(6) The common law affords employers a conditional privilege for the disclosure of information concerning employees;(7) however, many employers view this protection as inadequate.(8) Negligent hiring suits, whereby employers can be held liable for damages resulting from their failure to adequately investigate employees' backgrounds,(9) combined with increasing concern over negligent referral or negligent misrepresentation claims, have compounded employers' legal concerns in recent years.(10) Under this latter cause of action, employers can be held liable for not disclosing potentially dangerous characteristics of former employees or for misrepresenting the actual reasons for an employee's termination.(11)

The legal relationship between employers and employees also has changed in recent years. Statutory measures, such as Title VII of the Civil Rights Act of 1964,(12) have created additional remedies for employees suffering defamatory references.(13) Perhaps the greatest single cause of the current reference gridlock is employers' apparent misconception concerning the likelihood of a lawsuit based on a reference. According to a group representing employers' interests, many companies have adopted a "no comment" policy toward requests for references, despite the fact that their fear of lawsuits outweighs the actual number of such suits.(14) The recent statutory reforms are an attempt by state legislatures to address some of these concerns.

The first section of this Note briefly examines the causes of action that can stem from employee references. The second section discusses the current environment employers face as they weigh the potential costs and benefits of providing references. The Note also addresses the policy concerns that are inherent in any attempt to encourage the exchange of references. The next section surveys the various laws state legislatures have passed recently in an effort to address these problems. It analyzes the different approaches utilized by the states, how they alter common law doctrines, and, most importantly, how effective they are likely to be in promoting the exchange of employee references. This Note proposes a model statute that incorporates some of the features of these new statutes as well as some of the proposed reforms offered by academics. Specifically, the proposed statute would require that in safety sensitive employment settings, employers should be required by statute to disclose relevant information about potentially dangerous employees. …