California law protects employers from lawsuits based on negative employment references given without malice. Therefore, employers lawfully may communicate with other employers about their current or former employees’ performance, reasons for separation, and more.

To underscore the policy favoring employment references, the Legislature enacted in this session Assembly Bill 2770. The new law specifically protects employers from lawsuits when they inform prospective employers that an employee was discharged due to misconduct related to sexual harassment, or that an employee is ineligible for rehire for those reasons. This law overlaps the existing “qualified privilege” that applies to communications between “interested persons” and to references specifically.

Yet, many employers choose not to provide employment references to avoid disputes with their former employees. After all, ex-employees may react to a bad reference by filing legal claims, such as for defamation. Even non-meritorious lawsuits are expensive and disruptive. Additionally, a consistently applied “neutral reference” policy (typically a reference limited to dates of employment and last position held) can protect employers from a special type of defamation claim called “compelled self-defamation.”

AB 2770, a reaction to the “#metoo” movement to expose harassers, may encourage more employers to offer substantive employment references. Here is some guidance for employers that wish to provide more information about former employees.

First, employers that wish to speak about their former workers should be truthful. “Defamation” (including libel or slander) requires one or more false statements of fact, among other things. Truth is a complete defense to a defamation claim. Similarly, an employer cannot “blacklist” an employee by making a misrepresentation about a former employee intended to prevent the employee from obtaining new employment. Labor Code section 1050 provides that doing so is a misdemeanor.

Even a glowing reference that is false may be as risky as providing a bad reference in some circumstances. In Randi W. v. Muroc Joint Unified School District, a school district recommended a former administrator for employment at another school knowing that the administrator had previously engaged in misconduct with students. After the administrator engaged in similar misconduct at his new job, a student at the new employer brought a misrepresentation claims against the former employer. The California Supreme Court upheld the claim, which emphasizes that if one decides to speak, one must do so truthfully.

Second, in the context of references between employers, job references provided upon the request of a prospective new employer are privileged under Civil Code section 47(c), unless they are both false and made with malice. The privilege expressly covers communications concerning the job performance or qualifications of an applicant for employment, based upon credible evidence to a prospective employer.

Even under AB 2770, reporting an ex-employee’s discharge for sexual harassment is privileged unless false and based on malice. Malice can be inferred not only by proof of animosity, but also by showing the former employer had knowledge that the information is false and published it anyway, or that the employer did not take reasonable care to determine the truth of the statements. However, a false statement, reasonably believed to be true, does not equate to malice.

An employer that offers references on a selective basis is taking a significant risk. The employee may try to establish “malice” by demonstrating the employer generally provides no references, but went out of its way to provide a negative, false reference. Further, the employer may not rely on the special “reference” privilege contained in Civil Code section 47(c) if it initiates the reference.

The courts have held that a consistently applied, neutral reference policy will defeat a claim for “compelled self-defamation.” The essence of that type of claim is that the employee reasonably felt “compelled” to self-publish the employer’s reason for discharge because the employee believed the employer would publish a false, negative reference. The courts have reasoned that if the employer has a neutral reference policy, there is no “compulsion” to self-publish.

As discussed above, there are good reasons for employers to maintain a limited, neutral reference policy. However, employers wishing to support AB 2770’s intent, or to inform prospective employers about an employee’s poor performance, may do so without incurring legal liability. Here are some tips.

To minimize risk associated with substantive references, employers should strictly control who is authorized to provide employment references or communicate with prospective employers about a former worker. For example, a policy may prohibit unauthorized managers and employees from providing employment references on behalf of the employer. Employers should ensure employees are aware of the persons to whom references may be addressed.

Employers that decide to share negative references also should ensure there is a documented request for the information. Finally, employers may stay silent when asked for a reference. However, employers should be consistent: either consistently provide references (positive or negative), or strictly enforce their neutral reference policy.