I have been asked a lot of questions about what employers can and can’t disclose about a former employee’s performance and reasons for leaving the company. So, I decided to find out what the law says, as well as what in-house counsel would generally advise an HR department, about disclosures. I consulted with Carole Jurkash, a fellow University of Chicago graduate who went on to get her law degree from Yale Law School, to find out what the law says about this topic. Carole really knows what she is talking about because she has more than 25 years of experience advising various corporations on general business matters as an in-house attorney.
Carole made it clear that in most states employees are hired “at will,” which means they can be fired at any time for almost any reason. The exceptions to “almost any reason” are that an employer cannot fire you for any of the following: your gender, your race, your religion, your sexual orientation, your age, any disabilities you might have, or your marital status. If you are fired for any of those reasons you might have grounds to sue your former employer.
Employers are not prohibited by law from disclosing to a potential employer - who calls for a reference about a former employee - the reasons that the employee left, as long as the information they share is truthful. However, a lot of employers opt not to share the reasons employees leave a company or give any kind of references for former or current employees.
While an employer may be able to fire you for just about any reason, it is in the employer’s best interest to be consistent with all employees in order to avoid employment discrimination claims. In other words, as a best practice to avoid liability in employment cases, many lawyers advise employers to adopt a set of policies that are applied to all employees equally. Consistency is a very important element in understanding why employers may or may not choose to discuss the reasons a former employee left the company.
One thing that employers want to avoid is a disparagement lawsuit. “Disparagement” means saying something about a former employee that isn’t true, is slanderous, or is intended to hurt the former employee. In order to avoid the possibility of a disparagement lawsuit, many employers opt not to give any references at all. That’s right – no references for anyone - even their best (former) employees. Instead, many employers choose to institute a policy of only confirming dates of employment and salary information.
But why not give good references to employees who leave on good terms? Why give no references at all?
Employers are cautious about disclosing information about the performance of former employees because of a combination of two things: the need for consistent treatment of all employees to avoid employment discrimination claims and a desire to avoid risking disparagement lawsuits.
For example, if an employer discloses information related to a former employee’s poor performance the former employee in question could challenge that claim in court and claim that the employer is slandering them. Or that there was some sort of discrimination (whether there was or not). Even if an employer is perfectly justified in firing a poor performer it is likely that the employer’s attorney will advise them to keep quiet about the reasons for the firing. Why? Because, as you can see there is really no upside to the employer to disclose that information. Attorneys try to minimize risk for their clients. Since disclosing reasons for termination could be considered a risk, it is likely that most employers will simply not do so.
On the other hand if an employer gives glowing references for its former employees who were star performers while staying mum about the poor performers, they run the risk that a poor performer could sue them for being inconsistent in their policies. Seem crazy? The “poor” performer’s argument goes like this: the “poor” performer claims that the real reason the employer is refusing to give a reference is based on an unlawful discriminatory reason [race, religion, etc.], and that the employer always gives good references, for example, to ex-employees who are Catholic males under forty with Irish surnames regardless of the quality of their performance, and never gives references to Buddhist females over forty. Well the key to successfully avoiding or defending this type of claim is for employers to treat all employees equally. So, if they say great things when someone calls to check references for “good” performers and say nothing about the “bad” performers, they are not treating everyone equally. So many employers won’t give any kind of reference at all. If you happen to have been fired for poor performance this situation is certainly better for you than some alternatives.
[Instead of waiting until you're looking for a new opportunity, try asking for a project-based reference or recommendation while you're still employed and add it to your LinkedIn profile.]
So to wrap this up…Can a former employer disclose information about your job performance or the reasons you left the company to someone who calls to check your references? The short answer is: yes they can as long as they are truthful in what they disclose. The longer answer is that most employers choose to minimize the risk of certain types of lawsuits and therefore don’t disclose any performance related information about former employees or the reasons that employees have left the company.
If you are leaving a company for any reason ask your HR representative or the company’s legal counsel what the policy is about references for former employees. Finding out the company policy is the only way to know what you can expect in terms of a reference from a former employer.
Special thanks to Carole Jurkash for offering her thoughts on this important topic.