I have noticed an increase in defamation lawsuits in the news lately. Many of the lawsuits involve statements made about current or prior employees of the businesses being sued. As an employer, what can I do to decrease potential liability based on defamation?


There are many things employers can do to decrease their potential liability for defamation, including properly training personnel, consistently documenting employee performance, and taking action to prevent defamatory statements from being made. Defamation is a general term that encompasses two types of derogatory statements: slander (oral statements) and libel (written statements and other fixed representations). In the employment context, most defamation claims involve allegations that an agent of an employer made a defamatory statement about a current or former employee.

The statutory law governing defamation is found in the California Civil Code, which explains the necessary elements an employee must establish to have a viable claim for defamation. First, there must be a written or oral communication made to a third person, either intentionally or unintentionally. Second, the person making the statement must know it is false or must make the statement with reckless disregard for the truth. Third, the statement must expose the person who is the subject of the statement to hatred, contempt, ridicule, or humiliation, cause the person to be shunned or avoided, tend to injure the person in his or her occupation, or connect the person to a crime or disease, among other things.

However, there are five defenses to defamation claims that may shield an employer from liability. First, if the employer can prove that the alleged defamatory statement is true, the employer will have a complete defense to liability. Second, if the employee consents to publication of the alleged defamatory statement, the employer will have a solid defense (especially if the consent is in writing). Third, if a court determines that the statement was an opinion and not a statement of fact, the employer will have a defense. Fourth, statements made in the course of a legislative proceeding, judicial proceeding, any other proceeding authorized by law, or in the initiation of any other proceeding authorized by law are protected by what is known as the absolute privilege. Therefore, statements made during a court trial or during a Department of Fair Employment and Housing (DFEH) investigation are protected by the absolute privilege. Notably, this defense applies even if the alleged defamatory statement is proven to be false. Fifth, a conditional privilege applies to statements based on credible evidence and made without malice by employers to prospective employers concerning the job performance or qualifications of an applicant for employment who is a current or former employee.

With knowledge of the applicable law and defenses in mind, employers should take preventative action to avoid defamatory statements and should take corrective action to mitigate the ramifications of such statements if and when they are made. For example, employers should adopt a reference policy and instruct their employees to forward all requests for current or former employee references to the appropriate department or individual. Moreover, if the employer enters into a separation agreement with the employee, the agreement should state that any professional reference concerning the employee would be limited to disclosure of the employee’s job title and dates of employment.

Employee training may also help prevent derogatory comments in the workplace. Adopting and enforcing a zero tolerance policy for derogatory comments will help prevent liability. Also, be sure to properly document statements made in the context of performance evaluations and investigations. Statements made to prospective employers about current or former employees should also be documented.

Defamation can lead to civil liability, and jury verdicts in defamation cases can be quite large. In addition to civil liability, employers are subject to criminal liability for making misrepresentations about a former employee to a prospective employer if such misrepresentations prevent, or are made in an attempt to prevent, the former employee from obtaining employment. The California Labor Code allows former employees who are victims of such misrepresentations to collect three times their actual damages as a punishment to deter similar conduct in the future.

As explained above, defamation claims can result in significant liability for employers. However, by taking the appropriate precautionary measures and mitigating problematic situations when necessary, employers can reduce or even eliminate their liability. Because defamation claims are quite fact-specific, contact your local employment law attorney for advice regarding such claims.
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