Employers Can Be Found Liable for Negative Employment References

Two recent cases out of Ontario’s Superior Court, Papp v Stokes Economic Consulting Inc., (Papp) and Kanak v Riggin, (Kanak), provide guidance to employers on avoiding liability when giving employment references. Although in both Papp and Kanak the employers were cleared of any liability, both cases confirm that employers can be found liable for defamation when providing a negative reference.

What is defamation and a defamatory statement?

According to Law Hand Book 2017 and other legal resources,

Defamation is the action of damaging the good reputation of someone by both libel (written statements) and slander (spoken statements). A defamatory statement is a published statement (made to a third party) about an individual that would tend to lower that individual’s reputation in the eyes of any reasonable person.

The requirement that the statement must be “published” means the statement must be communicated to at least one other person. In addition, the communication does not have to cause actual harm—it merely must be capable of of calling into question the employee’s good name or reputation.

To determine that defamation occurred, the courts will examine the statement, the context in which it was made, the audience and the surrounding circumstances. As such, it is possible for a negative employment reference to amount to a defamatory statement. Let’s see what happened in Papp and Kanak.

Quick facts in Papp and Kanak

In Papp, the employee was dismissed due to shortage of work. After interviewing for a job, the employee lost out on obtaining employment with another company because of a negative reference from his former employer to his potential employer. The employee then sued his former employer and claimed that he was the victim of defamation and should be compensated for all related losses, including damages in defamation; punitive, exemplary and aggravated damages; and damages for intentional infliction of mental suffering.

The former employer stated that the employment reference he provided was not intended to be negative nor to hinder the employee’s job prospects. The former employer stated that his communications were truthful, both on the positive and negative aspects of the employment relationship. This communication included positive comments about the employee’s technical computing abilities and negative comments about his team-working skills based on both his own observations and comments he heard from others who reported to him. However, this negative feedback ultimately led to the employee not being hired in the new position.

In Kanak, the employee was dismissed after her employer was acquired by another company. The employee accepted a job offer a year later, which was later revoked after her former employer provided a partially negative employment reference based on past performance reviews. The former employee subsequently sued for damages in defamation.

In this case the employer stated that he liked the former employee and communicated both the individual’s strengths and weaknesses. On the negative side, the employer stated that in his opinion the employee did not take directions or handle stress well, and that she was not an effective collaborator. Despite this, he stated that he would consider hiring her, but in an independent capacity outside of the workplace. However, this negative feedback resulted in the employee’s conditional offer of employment being revoked.

Analysis and decisions on both cases

In Papp and Kanak, it was easily established that both employers in these cases had made negative remarks in reference to the respective employees’ attitudes and abilities to work with others that would clearly lower the respective employees’ reputation in the eyes of the respective future employers. These negative remarks were found to be defamatory statements.

Therefore, the question in each case was whether a defence was available to absolve the employer of liability. Defences in the case of defamation include justification (truth) and qualified privilege. According to Law Hand Book 2017 (below is a paraphrase):

• In the case of justification or truth, the defendant in a case must prove that the defamatory statements or its meanings are true in order to succeed in this defence. The plaintiff does not have to prove they are false. Further, the defendant must prove that the assertions conveyed by the words (not simply the words themselves) are true.
• A defendant who claims a statement was privileged is not arguing that the statement was true or that it didn’t hurt the plaintiff’s reputation. Instead, the affirmative defense of privilege argues that even if the statement was defamatory, the defendant cannot be held liable for it because the circumstances of the case show that the statement should be protected. Qualified privilege protects some defamatory statements made by a person who reasonably believed the statement was true when he made it.

In Papp, both justification and qualified privilege were used as a defence and successfully argued by the employer. The court found that the employer’s negative remarks about the former employee were true, and based on the employer representative’s personal experience with the employee. Also, the remarks based on the experiences of other employees were verified.

The court also found that an employment reference check is a situation protected by qualified privilege, and that even if the reference had been false; the employer’s representative had not acted with any malice, as he honestly believed his reference to be true. Further, the court found that the employer representative had not been irresponsible as he had verified the negative remarks before uttering them. As a result, the employer was cleared of liability.

In Kanak, only qualified privilege was used as a defence and successfully argued. The court held that the employer’s representative had provided what he believed to be an honest account of his experience with the former employee. In agreeing that there was no malice, the court specifically pointed to the fact that the statements had both positive and negative elements and were supported by examples and should be protected. The Court similarly held that an employment reference is protected by qualified privilege. As such, the employer was cleared of liability.

Takeaway for employers

Most prudent employers would not hire someone without checking with prior employers. The best predictor of future performance is past performance. Whatever reference is given, and however it is given, it must be truthful.

When employers are asked for references on a former employee, if the reference will be negative or have negative connotations, the employer should ensure that the former employee’s file is reviewed and all negative comments verified before providing the reference to a third party. When communicating the employment reference, the employer’s representative should speak as truthfully as possible and without malice.

Employers should also ensure that the person providing the reference can do so objectively and does not have any unresolved conflicts with the former employee.

There is no positive obligation on an employer to provide a reference for an ex-employee. The employer has a right to decline to give a reference for an employee about whom it would not speak positively or limit their comments only to basic information such as confirming the person’s dates of service and position.

However, an important principle resulting from this case is that providing references is protected by qualified privilege and as stated by the court in Kanak,

“The social policy underpinning the protection of employment references in this manner is clear: an employer must be able to give a job reference with candour as to the strengths and weaknesses of an employee, without fear of being sued in defamation for doing so. Without this protection, references would either not be given, or would be given with such edited content as to render them at best unhelpful or at worst misleading to a prospective employer.”

That said, employers should implement a policy with regard to how to properly prepare and provide employment references to reduce the risk of potential liability. The policy should ensure any statements made about former employees are truthful and limited to only providing information which is directly related to the employment relationship, and which is reasonable for the purposes of determining eligibility for employment.