Question:

Our Company has a neutral reference policy that allows us only to verify a former employee’s dates of employment and job title. We recently had to lay off several good employees due to a decrease in business. We would like to be able to provide more detailed references to help these employees find new jobs. What are the risks of providing detailed employment references in this situation?

Answer:

The reason many employers have neutral reference policies is because the California Labor Code imposes liability on any person who prevents a former employee from gaining employment by making a false or misleading statement about the employee. Although the law allows employers to make truthful statements about a former employee, disputes may arise about whether the employer’s statements are “truthful.” The disputes, and the risk of a lawsuit, can be lessened by the neutral reference policy adopted by your company.

However, in these difficult economic times, many employers are making exceptions to their policies by providing more detailed references for employees who are laid off. There are some important things to consider when making exceptions to your company reference policy:

  • Apply the policy exception uniformly. In other words, if the decision is made to provide more detailed references for employees who are laid off, then provide these references for all employees who are laid off. If some of the employees who are laid off were not good performers, exercise caution.
  • Consider providing a written letter of reference. This way you can think about what goes in to the reference, make sure it is accurate, and get the employee’s input and approval. Be certain the letter is factual and focuses on the employee’s skills and job performance, rather than a subjective description. Also, make sure that whatever facts are included in the reference letter can be supported by documentation in the employee’s personnel file. Some examples are the employee’s longevity, punctuality, and initiative.
  • If you decide you will give references by telephone, consider having the departing employee sign a release authorizing your company to provide a job reference, and releasing the company from liability for providing the reference. Although this may seem legalistic, it can protect your company in the event of a misunderstanding about what was said in the verbal reference.
  • Designate one person, by name or job title (i.e. Human Resource Manager), to be the contact person for employment references. That person should have uniform criteria that he/she will release to a caller. If it is appropriate, before the employee’s last day of work, talk to the employee about the employee’s strengths, and then provide a description of these strengths when providing a reference. For example, describe job duties, state how well the employee performed the job, whether the employee was punctual, and whether the employee is eligible for rehire.
  • Although it may be difficult, avoid making subjective statements about the employee. Focus on job performance, and above all, be honest in your remarks.
  • Be certain everyone in your company knows the contact person’s name and title, and protocol for providing references. Current employees should not provide “off the record” references.
  • Consider how long you will make this exception to your company’s policy on references. Hopefully, these are the only layoffs your company will make, and you can return to your company’s neutral reference policy.

Another alternative is to assist employees with retraining or outplacement services. If your company has the resources to actively assist the employees in their job search by working with a recruiter, this may help your employees find new jobs. Also, depending on your industry, you may know of employers who are hiring, and you can share that information with your former employees. It is understandable that you want to help your former employees find new jobs, but remember to adopt uniform procedures for providing more detailed references.
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