Giving bad references is OK if they’re true

Former employee seeks almost $800,000 in defamation and punitive damages for employer’s bad reference – but only gets $17,000 for reasonable notice of dismissal

You’ve probably heard of the saying, “If you don’t have anything good to say, don’t say anything at all.” Well, that’s not always the case – at least for employers providing references for former employees. Many employers are afraid to provide anything more than basic facts about a former worker’s job, especially if they don’t have anything positive to say. But a recent Ontario decision shows employers shouldn’t be afraid to be upfront about employee performance issues in reference checks – as long as it’s the truth.

 

In Ontario employer was entitled to give a bad reference about a former employee if it believed the information it gave was true, the Ontario Superior Court of Justice has ruled.

Stokes Economic Consulting (SEC) is an economic forecasting company in Milton, Ont., founded by Ernest Stokes in 1995. The company hired Adam Papp in March 2011 to be a staff economist. Papp successfully completed a six-month probationary period and became a permanent employee, joining four other staff economists with the company. They all shared certain responsibilities, but Papp was primarily responsible for preparing the Ontario economic forecast.

Over the next two years, Papp and Ernest Stokes corresponded regularly on matters such as Papp’s salary increases and bonuses as well as certain projects. However, in 2013, Stokes’ wife was diagnosed with terminal cancer and his son, Aaron, began overseeing Papp’s work. There was no formal announcement on the change in responsibility.

Papp characterized the workplace at SEC as informal and relaxed, but sometimes Ernest Stokes and his son shouted at each other with bad language. He also testified that Ernest Stokes was “casually demeaning” towards employees and their work. Other employees reported the same: a casual, friendly environment but things could get tense when deadlines were nearing.

While Papp was considered good and knowledgeable at his job, he sometimes didn’t get along with others at work. Some felt he was argumentative, made inappropriate comments, disrespected authority, and didn’t show a good work ethic — and as a result he wasn’t well liked. Aaron Stokes became frustrated with Papp, but Papp wasn’t disciplined because it was chalked up to “a personality issue.” There was one incident in the fall of 2013 when Papp and Aaron Stokes began shouting at each other and, according to Papp, Aaron make disparaging remarks to him in front of others and accused him of not doing his assigned work. Papp said he didn’t bring the matter to Ernest Stokes because he felt SEC was “a family-first company.”

Ernest Stokes was also aware of issues with Papp. On one occasion, Papp accused the staff of making him sick; on another Papp called everyone in a meeting “stupid.” However, Stokes believed these incidents were out of the ordinary and felt it wasn’t necessary to reprimand Papp.

On Dec. 19, 2013, Aaron Stokes informed Papp that his employment was being terminated due to a lack of work. According to Aaron, company sales were down and there wasn’t enough work for all the economists on staff. Papp was chosen to be terminated because they had completed a project in which he was involved and his salary was higher than the other economists because of his Masters degree. Papp was told: “We are not going to make a case against you; we are not going to deny you EI. The paperwork will be in the mail. Clean out your desk.”

The day after his termination, Papp emailed Ernest Stokes for permission to use him as a reference and Stokes agreed to verify the work he had done for SEC and his technical capabilities. About three weeks later SEC provided Papp with a paycheque for the first two weeks of January since it was late in sending his record of employment, which could delay Papp’s eligibility for employment insurance payments. At that point, the company believed it had paid what it owed Papp under employment standards legislation.

In May 2014, Papp applied for a job with the Yukon government, listing Ernest Stokes as one of his references. After interviewing him, the Yukon government considered Papp the top-ranked candidate for the position. As a result, Papp emailed Ernest Stokes to let him know he would be contacted regarding his job application.

On July 2, a Yukon government employee called Ernest Stokes and asked him a series of questions pre-printed on a form. In response to these questions, Stokes said Papp had been let go because “he was not needed anymore and a performance and attitude issue.” He also said the company wasn’t pleased with Papp’s work, he didn’t work well in a team setting — “he has a chip” — he didn’t get along with his co-workers, and when asked if he would re-hire Papp, Stokes said, “no way.”

Ernest Stokes later testified it bothered him that his interviewer didn’t seem to be interested in Papp’s technical capabilities and wasn’t expecting such a “mechanical” conversation, saying he wasn’t given a chance to elaborate on any of his answers. He agreed that he said Papp didn’t get along well with co-workers but he himself had no problem with Papp. He also agreed he said he wouldn’t re-hire Papp if he couldn’t get along with other staff.

Based on the reference provided by Ernest Stokes, the Yukon government decided not to hire Papp. They were satisfied with Papp’s technical abilities, but the reference check indicated he wouldn’t be a good fit for the job.

Papp sued SEC for wrongful dismissal (seeking $65,000 in damages), defamation (seeking $500,000), and more than $200,000 in punitive, exemplary and aggravated damages for intentional infliction of mental suffering.

The court agreed with Papp that Ernest Stokes' comments to his prospective employer were defamatory, “in the sense that they would tend to lower Adam Papp’s reputation in the eyes of a reasonable person” and they were communicated to at least one person other than Papp. However, the court found there was “a reasonable basis” to support the argument that what Stokes said was true.

While there was no formal complaint, reports from SEC employees and both Ernest and Aaron Stokes indicated Papp was difficult to work with because of a poor attitude. His inability to work well in a team environment was evident from both his personality clashes with Aaron Stokes and his co-workers, the court said.

The court also found that the context of the reference check provided Ernest Stokes with “qualified privilege" and Stokes genuinely believed what he said to be true — there was no malice involved.

The court determined that Ernest Stokes’ statements to Papp’s prospective employer did not qualify as defamation and provided no basis for punitive, exemplary, or aggravated damages or for intentional infliction of mental suffering.

However, the court supported Papp’s claim of wrongful dismissal and found Papp was entitled to four months’ pay in lieu of notice, after considering the specialized nature of his work, his relatively young age — mid 30s — and less than three years of service. Minus the amount Papp had already been paid, SEC was ordered to pay Papp $17,192.57 for wrongful dismissal.

For more information see:

Papp v. Stokes, 2017 ONSC 2357 (Ont. S.C.J.).

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