A friend of mine was recently terminated due to "restructuring". She has recently found out her previous employer has been giving prospective new employers a bad reference and has been quoted as to saying "If you want to make your life miserable, then hire her."

My question is, is this legal? Are there laws that govern what a previous employer can and cannot say? When does this go beyond a reference and become defamation of character? Any insight is appreciated! Thanks!

That's an opinion, which the ex-employer is within his rights to make (tacky, but legal). Now, if he was saying "Mary was fired for stealing" and Mary wasn't, there might be a case. However, if he said "Mary was fired because of her bad attitude, that would be legal.

is this legal? Yes.


Are there laws that govern what a previous employer can and cannot say? Only that the employer may not say anything that he knows to be false or that he should have known was false. He is free to give his honest opinion, even if it is negative.

When does this go beyond a reference and become defamation of character? When the employer says something that he knows is untrue and the employee suffers provable damages as a result.

It would depend both on the intent, and on the fact that it is false. A prospective employer as well as a former employer could be guilty of negligent conduct, particularly if the sought position involves risk to the person as well as property of others (That’s most jobs).

The prospective employer that checks the references ,and the former employer that supply information, are subject to potential liability if the exchange of information illegally harms the job applicant. This may arise under several common law principals, such as defamation, the right of privacy, and most important interference with prospective economic advantage.

Some states have enacted statutes to modify the common law
this along with recent court decisions have begun to slowly move in favor of the job applicant. Rightfully so in my opinion, since the potential for defaming a former employee by giving a bad reference is obvious.

Even company’s that try an end run, attempting to reduce liability by having former employees signing a release form stating that the company will not be held liable in some cases is insufficient. So the former employer should evaluate with honesty any request he/she receives regarding employee reference.
JoeC