Academic journal article Akron Business and Economic Review

Potential Employer Liability for the Disclosure of Employee Information

Academic journal article Akron Business and Economic Review

Potential Employer Liability for the Disclosure of Employee Information

Article excerpt

Potential Employer Liability For The Disclosure of Employee Information

The maintenance and dissemination of information related to current and former employees have rapidly emerged as areas that are ripe for potential litigation by employees who believe their employment records were improperly used. The rapid increase in the number of such lawsuits makes it essential that employers carefully review their current policies and procedures regarding the maintenance and use of such records to ensure that they are minimizing the risk of a successful lawsuit.

While conducting such a review, it is also important to remember that many potential lawsuits by former employees result from the conduct of other employees acting without guidance from management or even in direct contravention of established policies. As employers will generally be liable for the actions of their employees in employment information dissemination situations, it is also essential to ensure that all employees are properly trained and monitored to minimize potential liability.


Generally, three legal theories have been used by employees to bring lawsuits against their employers for the improper use of their employment records: defamation, invasion of privacy, and negligence. It should be noted that these theories are not mutually exclusive, and the facts of any individual situation could potentially create a lawsuit based upon one, two, or all three theories.


The most common type of lawsuit being filed by former or current employees for the improper use of employment data is defamation. Defamation suits filed by former employees against their former employers now constitute almost one third of all defamation actions [18].

The essential elements of defamation are: (1) that the communication must be false, (2) must be communicated to someone other than the individual, and (3) must cause harm to the individual's reputation [21].

Examples of the types of communications that have been considered defamatory, if false, are:

1. Describing an employee as "untrustworthy, untruthful, disruptive, paranoid, hostile. . ." [11];

2. Stating that an employee had been terminated for "gross insubordination" [15];

3. Stating that an employee was dismissed "for cause" [10];

4. Stating that an employee "suddenly resigned" [10];

5. Describing employees as "militant" [2]; and

6. Describing employees as having "emotional problems" [2].

It should be noted that some of the above statements were in writing and some were oral. Either type of communication can constitute defamation, with written communications being sub-catagorized as libel and oral communications as slander.

The simple fact that a defamatory statement is made does not necessarily subject the employer to liability unless the statement is false and not protected by a recognized legal privilege. Every state recognizes truth as a complete defense to a defamation action, regardless of how disparaging the information is [19, p. 739]. In addition, virtually all states recognize the need for employers to describe and transmit to others the reasons for discharging employees [14]. As such, they have granted employers a limited privilege that will protect such communications if the statements are made in good faith, for a legitimate purpose, and not inappropriately communicated. Practically, the existence of the privilege means that if the employer can establish that the communication was for a proper purpose, such as answering the request from a potential employer about an employee's reason for termination, and is done in good faith, which requires that the employer was not acting out of spite or ill will, and was not improperly disseminated, defamation can not be established [22].

Some examples of false statements that have subected an employer to a defamation action because they exceeded the protections of the conditional privilege are:

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