Reference letters — the myth of liability

By Jeffrey R. Smith ([email protected])

When an employer is looking to hire, contacting a candidate’s references is part of the normal due diligence process. References from previous employers can be particularly helpful, because they provide insight into the candidate’s on-the-job track record.

However, useful and informative references can be few and far between because employers seem to be wary of saying too much and getting into trouble, particularly if a reference isn’t exactly glowing.

Many employers prefer to give the basic facts about an employee’s time with them, such as position, length of service and job duties — also known as the “name, rank and serial number” reference. While this provides some information, it’s not really much help to someone trying to promote their skill nor to a prospective employer trying to figure out if a candidate is a good fit.

Why the caution? Some employers are afraid of getting in trouble if some of the information in a reference letter is inaccurate — from a prospective employer relying on the reference or a former employer who might feel slandered from a bad reference. But is there that much of a risk for trouble?

The answer appears to be no — there doesn’t seem to ever have been a successful action against an employer in Canada for a bad or inaccurate reference, according to Stuart Rudner, a partner with Miller Thomson in Toronto. As long as the letter described the employee in a truthful way and didn’t make anything up, there shouldn’t be any danger. And, in the case of a worker dismissed without cause, anything that could help the employee find work more quickly would be beneficial, as it could save the employer some money by reducing the notice period.

If a letter includes an employer’s legitimate opinions on the worker’s performance, what’s to be afraid of? Rudner says the only legal trouble that could come from a reference letter would be something that could be construed as bad faith that causes harm to a former employee’s job search. However, he also says bad faith could be gleaned from a failure to provide a reference. So it may actually be safer to bite the bullet and write something.

Do detailed reference letters really expose employers to liability, or is it actually more beneficial to provide them? Why are many employers so cautious in writing them?

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