As an employer, you might be asked to write an employee reference letter for a variety of reasons. On a second look, however, the answer might not be simple or easy. 

Explore some of the issues behind a reference request, and start weighing answers and implications of your business's references policy.

Positive Employee Reference Requests

If you're a business owner, manager or supervisor, it's almost a certainty that a current or former employee will ask you for a reference or recommendation.

It's not always a negative event when an employee leaves your business. Employees leave jobs to attend school, change lines of work or because a new job is a better fit. There are layoffs that can't be avoided. Neither side wants to burn bridges, and you never know when you may work together in the future.

There are good reasons for an employee to ask for a reference confirming a positive work experience with your business, and for you to document it in a reference letter. Positive references are often crucial in landing a new job or opportunity, and most workers want to document their accomplishments.

As an employer, you're likely to be looking for that same information when hiring new staff. Sharing references is a two-way street. If you don't give information, you can't expect to receive it. Finally, it may come down to being the right thing to do - an employee who has done a good job should be able to show it off with a solid reference letter or verbal confirmation.

Employer Liability and References

So, what gets in the way of a friendly request for a good reference? Maybe the real or perceived threat of a lawsuit arising from the reference. Employers have faced lawsuits from employees and third parties, such as customers, over what was or wasn't said in an employee reference.

Lawsuits and Employer References

Here are examples of lawsuits resulting from employer references:

Defamation. Employees may try to sue former employers over negative information given in an employee reference.

Lawsuits by third parties. Someone such as a customer, patient or later employer could try to sue a former employer for failing to disclose or leaving out negative information about an employee who causes harm in his or her next job.

For example, in one case, a hospital sued a doctor's former employer, which responded to a reference request, but didn't reveal that the doctor used narcotics while tending to patients. The hospital claimed it wouldn't have hired the doctor if it had known his full history, and it ended up settling a malpractice lawsuit over a surgery he performed. The response by many employers is to avoid the risk of such lawsuits with reference policies limited to confirmation of an employee's position and employment dates.

Employment Laws, Contracts, Releases and References

State laws, contracts and releases help both sides avoid risks such as lawsuits while allowing information about employment to keep flowing.

Many states have laws giving employers protection or qualified immunity, when they give references in good faith. When asked for a verbal or written reference, an employer can give truthful information about an employee's performance without fear of risking a civil lawsuit.

Likewise, some states also have service letter laws entitling an employee to a letter summarizing the employee's dates of employment, job titles and possibly the reason for leaving. Some employment contracts or union contracts may have similar terms.

Many employers include reference releases in the hiring process. By signing, an applicant authorizes an employer to check references, and provides a release of liability from possible lawsuits connected to the reference check.

While the law may make the act of giving a good reference more complex than it ought to be, policies can be created to allow the exchange of information and balance interests on all sides.

Questions for Your Attorney

  • I would like to give employees reference letters if they ask for them. Do our state laws provide immunity?
  • Can I bar my company's employees from giving references for current or past coworkers?
  • If an employee committed any crimes while on the job, do I have to reveal that in a reference check?