• Key point: In some states, employers can provide references about former workers free from any fear of legal liability so long as the former workers sign appropriate releases.
• A Texas appeals court ruled that a “release form” signed by an employee prevented her from suing a former employer for statements it made about the employee to a prospective employer. An employee who had been terminated by her employer applied to another employer for a job. The new employer had the employee sign a form entitled “authorization for release of information.” This form provided, in part:
I hereby authorize any investigator . . . bearing this release to obtain any information from schools, residential management agents, employers, criminal justice agencies, or individuals, relating to my activities. This information may include, but is not limited to, academic, residential, achievement, performance, attendance, personal history, disciplinary, arrest, and conviction records. I hereby direct you to release such information upon request to the bearer. . . . I hereby release any individual, including record custodians, from any and all liability for damages of whatever kind or nature which may at any time result to me on account of compliance or any attempts to comply, with this authorization.
The prospective employer contacted the former employer as part of its background check of the employee, and was informed about her negative job performance. On the basis of this information, the prospective employer declined to hire the individual. She promptly sued the former employer for defamation, and a jury awarded her $1 million in damages. The former employer appealed this verdict. A state appeals court reversed the jury’s verdict, and ruled that the former employer should pay the employee nothing. The court began its opinion by observing that statements made by a former employer to a prospective employer about a former employee are protected by a “qualified privilege.” This ordinarily means that such statements cannot be the basis for defamation unless they are made with “malice.” In this context, malice means either that the former employer knew that the statements it made were false, or that it made statements with a reckless disregard as to their truth or falsity. The court concluded, however, that the statements made by the former employer in this case were protected by an absolute privilege because of the release form signed by the former employee (quoted above), and accordingly it was impossible for the employee to sue her former employer for defamation. The court rejected the employee’s argument that one cannot consent to defamation, or that such a consent would violate “public policy.” On the contrary, “the efficacy of such a consent is recognized by . . . learned treatises, Texas case law, and the law of other states,” and accordingly “it is clear that one can consent to a defamation, and that consent creates an absolute bar to a defamation suit.” The court continued: “The employee who has been discharged, but who consents to inquiries to previous employers for references in connection with an application for a new job, must be considered willing that presumably unfavorable views be published to the potential new employer. This principle has been applied in Texas. And in other states a former employer has absolute immunity when he utters the alleged defamation in response to an inquiry from a prospective employer with the [employee’s] consent.”
The court noted that “consent does not necessarily give a former employer license to tell the world everything he knows about the [former employee] for an unlimited time.” Rather, “the extent of the privilege is determined by the terms of the consent.” In this case, the court concluded that the consent signed by the former employee was “broad and all-encompassing” in three different ways:
The [release] first authorizes the [prospective employer] to contact almost anyone “to obtain any information from schools, residential management agents, employers, criminal justice agencies, or individuals, relating to my activities.” Second, it authorizes the persons contacted to give a great variety of information, which “may include, but is not limited to, academic, residential, achievement, performance, attendance, personal history, disciplinary, arrest, and conviction records.” It does not stop at authorizing the disclosure of this information; it directs those who possess information about [her] to disclose it to the investigator . . . . Finally, it releases [the former employee’s] right to sue, using language as broad and inclusive as we can imagine. It says, “I hereby release any individual, including record custodians, from any and all liability for damages of whatever kind or nature which may at any time result to me on account of compliance or any attempts to comply, with this authorization.”
The authorization simply does not permit the interpretation that the signer reserved the right to sue persons who honor it and give information fairly related to the matter covered. Nothing suggests that [the former employee] authorized only the release of favorable replies. That construction would, of course, make authorizations to respond to background checks completely worthless. The release says, in effect, you may find out what other people say about me, and I will not litigate if the responses are unfavorable. Fairly viewed, it does not exclude from its reach defamatory remarks about [the employee’s] job performance uttered to the investigator.
Church leaders should keep this case in mind when asked to provide references for former workers. While in many states, such references are protected by a “qualified privilege” (as explained above), it is possible in many states to enjoy an absolute privilege from liability if the former worker signs an appropriate release or consent form. Smith v. Holley, 827 S.W.2d 433 (Tex. App.—San Antonio 1992).
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