Employer Liability When Providing Employee References

If you can’t say anything nice, is it better to say nothing at all?

While there is no legal requirement for an employer to provide a reference for a former employee, providing employment references has become a legal minefield. Fear of defamation actions, human rights complaints, and privacy complaints has prompted many employers to simply throw up their hands and implement policies limiting references to simple confirmations of employment.

Unfortunately, policies limiting or prohibiting references cause employers to miss out on the benefits of providing references. Importantly, a positive employment reference may help an employee find work faster and limit an employer’s liability in a wrongful dismissal. More broadly, employment references are an important tool for employers in recruiting and screening candidates.

Two cases out of Ontario, Papp v Stokes Economic Consulting Inc., (“Papp”) and Kanak v Riggin, (“Kanak”), provide guidance to employers on avoiding liability for employment references.

Both Papp and Kanak confirm that employers can be found liable for defamation when providing a negative reference. Defamatory statements are published statements about an individual that would tend to lower that individual’s reputation in the eyes of a reasonable person. The requirement of that the statement must be “published” means the statement must be communicated to at least one other person. As such, it is possible for a negative employment reference to amount to a defamatory statement.

Negative employment references will only attract liability for defamation in certain circumstances. In both Papp and Kanak, the employers were able to successfully defend the otherwise defamatory statements they made. Both employers relied on the defence of “qualified privilege”. Qualified privilege allows a defamatory statement to be made without fear of liability when the individual making the statement does so to meet a legal, moral, or social duty. It is generally recognized that there is a social benefit that flows from employers being able to provide honest, but otherwise negative, references to a prospective employer. As long as the negative reference is given in good faith, without malice and with the honest belief that the statement is true, the employer giving the reference will not be found liable for defamation.

The employer in Papp also successfully relied on the defence of justification; the negative reference justified because it was true . An employer will not be liable for otherwise defamatory statements about a former employee if those statements are truthful.

Defamation aside, employers should also ensure the reference they are providing does not put them at risk of a human rights complaint. For example, commenting on an individual’s gender, race, or disability is inappropriate and may suggest (and perhaps bolster a former employee’s claim) that the former employee, if terminated, was let go based on a prohibited ground. Moreover, such comments can put the potential employer in a difficult position as hiring decisions that are made based on one or more of the prohibited grounds are prohibited.

Finally, it should be noted that prior to providing a reference an employer should ensure that it is not breaching any applicable privacy legislation. In Alberta, the Personal Information Protection Act (“PIPA”) generally applies to employees working in private sector organizations. Employers subject to PIPA legislation do not require employee consent prior to providing a reference to an inquiring employer. However, if an employee works for a provincial or federal public body, privacy rights are governed by either the Freedom of Information and Protection of Privacy Act, or the Personal Information Protection and Electronic Documents Act. Both of these enactments require that an employer obtain employee consent prior to providing a reference.

In summary, while it may not be appropriate to have no rules with respect to the provision of references, organizations do not need to limit themselves to only providing simple confirmations of employment. References continue to be of value to employers and employees alike and as such, a policy which encourages honesty while taking into account human rights and privacy concerns can be worthwhile. However, it should also encourage anyone contacted to provide a reference to discuss the content of the reference, whether positive or negative, with human resources before it is finalized.