Reference givers need wariness Too much or too little data can cause severe legal problems.

October 28, 1991|By Michelle Singletary | Michelle Singletary,Evening Sun Staff

When it comes to giving references, personnel managers and supervisors all too often heed their mothers' advice: "If you don't have anything nice to say, don't say anything at all."

In a survey released this summer, the National Association of Corporate and Professional Recruiters found that 41 percent of senior-level human resource executives polled have a policy of giving limited information in response to reference requests. Like a captured prisoner who is told by his superiors to give only name, rank and serial number, supervisors are directed to give only job title and dates of employment.

However, such policies can be as fraught with problems as lawsuits from former employees alleging defamation because of bad references.

"Lawsuits for defamation have led employers to clam up," says ** Andrew C. Goresh, vice president and director of human resources for T. Rowe Price Associates.

"But in employment situations employers need to communicate with each other," he says. "The attitude that if you don't say anything you won't get in trouble is incorrect."

Goresh says companies could be held just as liable for what they don't say.

One very large risk of not sufficiently getting background information of employees is a lawsuit for "negligent hiring," in which an employer is sued for injuries suffered by a third party as a result of conduct by one of its employees.

The general theory of negligent hiring lawsuits is that the employer, because of its negligent hiring practice, placed an individual in a position where he or she could injure a member of the public, according to the Society For Human Resource Management.

The society, from Alexandria, Va., has put together a handbook specifically on how to do and give reference checks.

The pendulum on this issue swings back and forth, leaving employers unsure whether they should keep their mouths shut or tell all.

About 10 years ago large corporations stopped giving out reference information because of the increase in defamation suits and resulting losses, according to Bob LoPresto, president of the high-tech division of the California executive search firm Rusher Loscavio & LoPresto. LoPresto assisted the human resource management assocition with developing its Reference Check Handbook.

In 1988, 73 percent of defamation cases heard by courts nationwide resulted in verdicts in favor of employees, according to Jury Verdict Research Inc. of Solon, Ohio. In 1989, the latest year for which statistics are available, 74 percent of the cases were in favor of employees. In 1988 the awards ranged from $7,460 to $2.2 million.

In a 1991 ranking of the complaints that resulted in $1 million or more in lawsuit damage awards, defamation ranked 13th. Medical claims were first, followed by product liability, according to the Jury Verdict, which tracks personal injury cases.

"The trend now is for more and more companies to give out more information," LoPresto says.

This year, a state court in Colorado ordered McDonald's to pay a $210,000 damage award after a worker sexually assaulted a 3- year-old boy at one of its restaurants. The employee had a history of sexually assaulting children, but McDonald's was unaware of his conviction. The court ruled the company had failed to check all of the employee's references.

"There is a heightened duty for employers to do reference checks. A lot of employers pay lip service to reference checking but really don't do it," says Goresh, who is an attorney. He adds that if an employee comes in contact with the public, especially if that contact is not supervised (for example, a maintenance worker who can enter people's homes), reference checks become crucial.

Goresh says Maryland law provides a "qualified privilege" for communications arising out of the employer-employee relationship. It basically protects honest responses given in good faith to someone with a need to know the information. A former employee can challenge that "qualified privilege" by proving that defamatory information was given out with malice.

At T. Rowe Price, which has a work force of about 1,500, Goresh says the firm generally responds to written requests for reference information and will go beyond giving superficial information. However, Goresh says, the comments are based on quantifiable rather than subjective information, such as that from a performance evaluation.

"If the information you give out is truthful and accurate, even if it's not favorable, you shouldn't have any problems," he says.

Reference checking is not the legal minefield it appears to be, Goresh says. The law recognizes a legitimate need for employers to communicate with each other regarding former and prospective employees.

Goresh and other experts offer these hints for giving references:

* Keep good records. Performance appraisals become important tools to prove good and unflattering information given out about a former employee.

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