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Negligent Non-discloser: No News is Bad News

NEWSLETTER • volume 3 • number 2

Suppose you learn that a former employee has threatened a co-worker at his new company. Can you be held liable? The surprising answer is "maybe." If you deliberately withhold negative information about an employee, and he later harms or harasses someone in the new job, you and your company could be found guilty of negligent non-disclosure.

Compounding the problem is the fact that negligent non-disclosure does not just apply in cases where companies give only "name, rank, and serial number" references to protect themselves from defamation suits. It also applies anytime someone gives a positive reference but omits negative details. In a landmark 1995 case involving sexual molestation, the California Court of Appeals ruled that although employers do not have an automatic duty of disclosure, once they decide to give a positive recommendation, they are obligated to disclose negative information as well.

Although this appears to be a lose-lose situation for employers, who seem likely to end up in court no matter what they do, there is a way out of the dilemma. Some organizations, including the University of California, are taking matters into their own hands and implementing clear and reasonable policies for handling reference checks.

UC officials, for instance, recently adopted certain provisions of the California Civil Code, Section 47, as guidelines for providing references. These provisions offer protection to employers who furnish references that are based on "credible evidence" and given "without malice." The point is that employers cannot be held liable when they provide what they should be providing anyway - an honest and balanced picture of an employee.

We're delighted to see someone finally taking steps to deal with reference checks in a rational manner. But until your company adopts similar guidelines, the best tactic may still be to confer with an attorney. Knowing what details you can or should provide is the best way to stay out of court.