Successful lawsuits based on reference letters extremely rare

It’s a very mixed up world when it comes to employers and references.
Any prospective employer doing their due diligence wants to talk to people who have worked with their hiree to make sure that there are no skeletons in the closet and to find out what other people think of them in the workplace. Usually, that call is only made after the candidate has been successful at an interview.
These same employers, however, or many of them, have a policy that they will not provide references for departed employees and will only advise of the position held  and the employee’s tenure. They want their backs scratched but they don’t want to scratch anyone else’s.
This reticence about providing references is based on an irrational fear that if they say something negative about an employee, they will get sued. Often this policy is handed down from an American head office where the laws of their land are different.
The fact is that in Canada successful lawsuits brought by former employees as a result of a reference provided are extremely rare. Successful lawsuits based on references are like finding a needle in a haystack.
If somebody asks your opinion about the work ethic of a former employee, you have the right to answer honestly. If they ask if you would ever rehire this employee and the answer is no…then the answer is no. If you are asked for the employee’s strengths and weaknesses and you give your honest impression, I very much doubt there is a judge in the land who would be prepared to find fault with that. Opinions are subjective…meaning they are just opinions. If, on the other hand, you have a former employee who was guilty of some dishonest behaviour or other egregious conduct, silence is probably golden. If your phone rings and there is a prospective employer asking you for a reference for such an employee, the safest bet is to simply indicate that you are not prepared to provide a reference and end the conversation. Any prospective employer with half a brain should get the message.
If you don’t follow this rule and make specific allegations of a serious nature that you cannot prove, you could land yourself in trouble. Recently in Saskatchewan, a  manager at a car dealership contacted someone that was contemplating going into business with a former employee. He told this prospective business partner to be careful because the employee had been terminated as a result of a missing vehicle. In fact, the employee had been let go as a result of a shortage of work and there was no missing vehicle. The employer ended up paying $20,000.00 in aggravated damages for this statement in addition to pay in lieu of notice.
If you cannot absolutely prove the allegation, keep your mouth shut. Even if you can prove it, whether it’s fair or not, silence may be in your own best interest.
But please don’t adopt an across-the-board policy of never giving a reference for anyone. It’s hard enough for an employee of 15 years to lose their livelihood through no fault of their own. It only compounds the harm when they don’t have somebody to provide a reference to help them find new employment. The fact is that there is no law anywhere requiring you to provide anyone a reference, although in some cases where judges have found that the employer maliciously withheld a reference because they were being sued for a severance package, it has increased the damages awarded.
Even if you are being sued by a terminated employee for a bigger severance package, remember that the sooner they find work, the less money you are going to have to pay. They can’t claim for a loss they did not suffer as a result of having found new employment. Especially in this situation, you should be giving as glowing a reference as your conscience will allow. I am not saying that you should lie but every employee has some strengths and those are the ones you should focus on.
So far as I am aware, there is yet to be a successful lawsuit in Canada where a new employer has sued an old employer for giving a good reference to somebody who turned out to be a dud.
As published by The Hamilton Spectator, February 6, 2012
Ed Canning
Ed Canning
P: 905.572.5809