A New Jersey Court ruled that an employer may be held liable for damages as a result of providing an inaccurate and/or false employment reference for a former employee. The case outlined when an employer is liable in these circumstances.

The Court ruled that an employer could be held liable for "negligent misrepresentation" of a former employee's work history if:

1. the inquiring party clearly identifies the nature of the inquiry;
2. the employer voluntarily decides to respond to the inquiry, and thereafter unreasonably provides false or inaccurate information;
3. the person providing the inaccurate information is acting within the scope of his/her employment;
4. the recipient of the incorrect information relies on its accuracy to support an adverse employment action against the plaintiff; and
5. the plaintiff suffers quantifiable damages proximately caused by the negligent misrepresentation.

Marsha Singer began her employment with Beach Camera and was introduced by Beach management in a company-wide email as its Vice President of Daily Operations, even though she performed the job of a Customer Service Representative. While working for Beach, Singer responded to a job posting for a position at HRK Industries, Inc. She was offered a position at HRK as a Customer Service Manager. Henry Kasindorf, owner of HRK hired Singer based solely upon the work experience she listed in her resume. At her request, he did not contact Beach to verify her employment history.

After Singer commenced employment at HRK, Kasindorf became concerned with her job performance. He contacted her former employer and spoke with several of Singer's former colleagues about her employment with Beach and her role at that company. Each Beach representative with whom Kasindorf spoke indicated that Singer worked for Beach as a Customer Service Representative. Two Beach managers also represented to Kasindorf that Singer was a Customer Service Representative and not a vice president. Kasindorf thereafter terminated Singer's employment because she had "been hired under fraudulent terms and . . . misrepresented her previous position on her resume."

The Court in ruling for Singer, held that employers who voluntarily choose to respond to a reference inquiry may be held liable for negligent misrepresentation based on misleading or incomplete statements made in employment references.

This case outlines the circumstances under which employers will be held liable for disseminating false and/or misleading communications about a current or former employee's work history. Employers should use the following steps when providing employment references to minimize the potential for liability:

1. Any employment verification requests should be directed to and answered only by pre-designated company representatives.
2. Supervisors within the company should be directed to forward any reference requests to the designated representatives.
3. Those requesting references should be required to submit a written request for employment verification information, as well as, a written authorization, signed by the former employee, authorizing the release of the employment information.
4. Telephone inquiries for employment references should be documented in an "employment reference" file, setting forth the nature of the request, the date of and parties to the call, and the information provided.
5. Every effort should be made to ensure that information provided in response to a reference is accurate in all respects.

If an Employer adheres to the above steps it will be able to:

It should be noted that many states have specific laws providing employers civil liability immunity protection when supplying job references as long as they act in good faith and do not knowingly or recklessly provide false information. Iowa has such a law. See Iowa Code Chapter 91B.2. Even if your state does have immunity protection, the procedures outlined above should be followed to document that the employer acted in good faith in responding to an employment verification request.