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Employment References—
Can You Get (And Give) An Honest Answer?

By William R. Henry, Jr.

Item — Charles Cullen, a registered nurse, was arrested in New Jersey in December, and admitted having administered lethal doses of the heart medication digoxin to as many as 40 patients at 10 facilities where he had worked over the previous 16 years. According to reports, Cullen had been fired by five hospitals and one nursing home for suspected wrongdoing, but reference checks failed to stop him from gaining new employment at other facilities. Lawsuits have been filed by some patients’ families, against hospitals that employed Cullen, and by some hospitals against a temporary staffing agency that placed him.

Have you ever called a prospective hire’s former employers, and been told they would provide only “name, rank and serial number,” and no comments about qualifications or performance? Not very helpful for the major investment in human resources you are considering. Or have you been on the receiving end of such a call, cringing at the sound of a lazy, incompetent, troublemaking ex-employee’s name, but providing only a bland confirmation that she worked for you during a particular time frame, in a particular position? You would like to warn the prospective employer, but perhaps were afraid the applicant, when rejected, would sue you for defamation.

Criminal background checks and credit reports have an important place in hiring (more about that, farther along in this article). Still, those tools would not have protected the hospitals that hired Charles Cullen. Nor do they protect an employer from hiring someone who has no criminal history or financial problems, and is not likely to kill someone, but simply is a poor performer.

What employers have needed for years is freedom of good-faith expression; the freedom to discuss candidly an ex-employee’s weaknesses as well as strengths, and even suspicions that are well-founded, without fear of reprisal. Now, increasingly, that freedom is a reality. In the past few years, 38 states — including Virginia and Maryland — have adopted laws that afford employers substantial protection. (The District of Columbia does not yet have such a law.)

When you need to obtain a reference, you can cite these state laws (see Virginia and Maryland, below) to encourage previous employers to be open with you. In fact, you should. You might prevent your organization from hiring a lazy, incompetent, dishonest, counterproductive employee…or even a dangerous one, who could harm a third party and trigger a negligent-hiring suit against your organization.

At the same time, when you are asked to provide a reference yourself, you can have confidence that an honest comment, even if negative, will not leave you vulnerable to a successful legal attack by a former employee.

Virginia And Maryland Laws

Code of Virginia, Title 40.1, Chapter 3, Article 1 protects “truthful statements of the reason for (an employee’s) discharge,” “truthful statements concerning character, industry and ability,” and “good faith information (about) professional conduct, job performance, or reasons for separation.” That protection is lost only for “willful or malicious attempts to prevent a person from gaining employment.”

Similarly, the Annotated Code of Maryland, Courts and Judicial Proceedings, provides that discussion of job performance and reasons for termination is protected, unless a plaintiff shows “clear and convincing evidence of actual malice, or intentional or reckless disclosure of false information.”

The other 36 state laws have similar protections, and standards for the burden of proof that must be overcome for an employee to challenge an employer successfully.

Protect Your Rights, In Writing

Consider including, in your employment application or in a separate document, a release the applicant must sign that acknowledges a previous employer’s right — and your right, at any time in the future — to discuss the applicant’s job performance, reasons for separation, and whatever else the state law allows. Cite the law.

Your ability to fax a copy of that signed release to previous employers might make the difference in your ability to have a candid conversation with them.

(NOTE: The list of states with employer-protection laws is in Resources, below. Where other states come into play, you can still require that applicants sign a release, holding employers harmless for references as long as those references are made in good faith. Also, when employees leave, consider asking them to sign a release allowing you to provide good-faith comments if asked for a reference. Employees who are leaving on good terms will appreciate it. For those who refuse to provide the release, make a note in the file. If you get a call from a prospective employer, tell him or her that the employee refused to sign the release, and stick to name, rank and serial number.

Obtaining useful references from previous employers can be crucial in evaluating applicants. While we are on the subject, though, let’s also touch on additional information that can be crucial.

Criminal Background Checks, Credit Reports, And Other Investigative Reports

These resources are available to employers in a position to hire someone, as long as the requirements of the Fair Credit Reporting Act (FCRA) are followed. In general, the employer must get the employee’s or applicant’s written agreement, in advance, before obtaining “consumer reports” that could include credit reports, motor vehicle records, or criminal background investigations conducted by a third party. The requirements of the FCRA are detailed, and beyond the scope of this article (but see Resources, below, for links to FCRA information.)

Asking The Right Questions

Good risk management requires that each position in your organization be analyzed to determine whether criminal background checks and/or credit reports should be required (unless you require it for all positions), and to determine areas of inquiry for your interviews with former employers who are willing to cooperate.

What are the risk exposures? For example, if you are hiring someone who will be making deliveries to customers’ homes, you had better make every effort to determine whether the applicant has a criminal history. If he has a prior conviction for assault, then he rapes or beats up a customer, you are wide open for a negligent-hire lawsuit. If your new hire will be handling money, better see what the credit report indicates about her current level of debt. Will the new person be supervising others? What can you learn from a former employer about how well he got along with his direct reports? Take time to listen well. If the employer feels that the law protects negative references made in good faith, and you take your time in the conversation, you might hear about a sexual harassment or other discrimination claim or some other eruption that didn’t quite happen — but could happen in your own workplace.

Resources

Federal Trade Commission document, “Using Consumer Reports: What Employers Need To Know” — http://www.ftc.gov/bcp/conline/pubs/buspubs/credempl.htm

The Society For Human Resource Management (www.shrm.org) offers a variety of information resources on Fair Credit Reporting Act requirements, as well as many other human resources topics. (Some resources are restricted to SHRM members.)

A number of firms provide background investigative services. ChoicePoint, Inc. (www.choicepoint.com) is a well-known one. Put “background investigations” or similar terms into a search engine, to find other providers.

If you need formal legal counsel on the topics in this article, or other employment practices, CIMA can put you in touch with the right people. If you purchase employment practices liability insurance through us, your insurance carrier or a law firm they retain may provide consultation, often free of charge. CIMA also can refer you to employment law firms in this area.

NOTE: On a related subject, the December 2003 issue of The CIMA Letter includes an article on how to terminate problem employees properly. If you do not have that issue, CIMA’s Communication Department will email a copy to you on request. Call 703-739-9300 or email William Henry.

States currently having statutes protecting employer references: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, Wyoming.

ABOUT THE AUTHOR

William Henry is director of communication for The CIMA Companies, Inc., an independently owned insurance broker and risk management firm with offices in Alexandria, VA, Baltimore, MD, and Atlanta, GA. More information is available at www.cimaworld.com.

riskVue | The webzine for risk management professionals
April 2004