Employee References: The Good, Bad & Ugly

A recommendation from an employer must be given in a fair, honest, and accurate manner. You as an employer, have responsibilities not only to the person being referenced but also to the person requesting the reference. Therefore, the reference should be honest and not overly positive if it is not warranted or overly negative if that would also offer a false image.

Employers should proceed with caution when asking for references because mistakes could lead to legal liability for carelessness, discrimination, defamation, or violations of data protection. As a result, many businesses today will simply provide the most basic factual information about their staff.

Should your employee expect a reference from you?

Unless the employer is required to do so by law (such as in a discrimination or victimization claim) or by contract (such as in a settlement agreement), they are under no legal obligation to provide a reference for a former employee. Some industries, like finance and education, have strict guidelines for the format and content of references.

A company should have a standard policy on references, outlining the process for composing references and assigning authority to specific individuals. Such a policy should be included in the employee handbook so that everyone is on the same page. Having such a policy in place will guarantee uniformity of treatment. An employer must not provide a comprehensive reference for one worker while only providing a brief one for another. This could potentially lead to charges of bias.

Is it acceptable for you as an employer to merely submit a written recommendation?

To reduce their liability, many businesses only provide generic references that mention the employee’s job title and the time period during which they were employed. References that don’t mention the applicant’s talents and qualities aren’t very useful to hiring managers. An employer is within their rights to do so, so long as all current and former employees receive the same treatment. A more in-depth reference may be negotiated as part of a settlement agreement for a departing employee. In case of a dispute in the future, it is best to avoid giving oral references because there is no record of what was said.

Claims of negligence brought by the new company.

The reference must be honest and forthright, providing the intended recipient with no false or misleading information. The reference doesn’t have to be exhaustive in the sense that it contains every single detail, but it should contain enough information to not mislead. If a new employer suffers monetary loss because they relied on an overly positive reference letter or one that omitted critical information regarding the employee’s work performance, the new employer may file a claim for damages.

Therefore, individuals providing references should take precautions by including a disclaimer to avoid liability for negligence. For instance: “To the best of [the employer’s] knowledge as of the date of this letter, the information contained in this reference is true, fair, and accurate for the use of the addressee only.” However, [the employer] does not accept responsible for any errors, omissions, or inaccuracies in the foregoing information, or for any loss or damage that may come from reliance being placed upon it by the addressee or any third party.

Can a former employer provide a “bad” reference?

Your definition of “bad” will determine the correct response. A reference might have some unflattering things to say about a person, but the real question is whether or not those things are accurate.

Any criticism of the individual or their work in a reference must have been discussed with them beforehand, and any information provided must be verifiable. Controversial supposition and negative speculation should be left out. However, employers are permitted to voice unfavorable opinions so long as they have given the opinion and the supporting evidence due consideration. It is also crucial that any comments made about the referee’s performance or attendance not be based on the referee’s disability, as this could give rise to a claim of discrimination.

An employer would be wise to stick to what they know to be true about an employee. A common inquiry from a potential employer is if the previous employer thinks the candidate is qualified for the position being considered. As the employer, you probably don’t know enough about the position or the company to offer meaningful feedback on it. It ultimately boils down to whether or not a “bad” reference is accurate (including whether or not something has been left out that would change the perspective if it were provided), fair (given the circumstances), and truthful.

What are the risks which come with giving bad references to employees and what action can employees take against you as an employer?

If a former employer refuses to offer a reference or provides an unjustifiably unfavorable reference to an employee based on a protected trait, such as disability or race, the employee may file a claim of discrimination or other tort-based claim. For example, the former employee may file a claim for negligent misstatement if the reference is false, unjust, or inaccurate. An employee may have a defamation action if the author of a negative reference made a statement about them without a reasonable basis.


What a former employer can and cannot say about an employee is not regulated by any federal statutes. Although, qualified immunity laws have been passed in many states, protecting employers that assist with reference checks. If the employee can prove that the employer behaved maliciously or provided intentionally misleading information, the employer will no longer enjoy immunity. If you have any questions regarding providing negative references and feedback for your former employees and the legal consequences that may arise from it, you can reach out to our employment law attorneys at the Walsh Law Firm LLC.