What to Say When Providing a Reference as a Former Employer

Many companies are happy to refer former employees who were excellent at their job. You probably have a long list of nothing but good things to say about those employees. However, is there anything you should avoid talking about in your reference? And what about those former employees who weren’t so great? What can you say about them when a prospective employer calls you for a reference?

The legality of what you can and can’t say about a previous worker can get pretty murky, and what you can disclose when providing a reference largely depends on state laws. We’re here to break it down for you so you can share the proper information about your past employees, while still protecting yourself against possible messy lawsuits.

References can depend on the state laws

There are no federal laws that restrict what a former employer can or cannot divulge about former employees. The Equal Employment Opportunity Commission (EEOC) only states that an employer can’t give a negative or false employment reference because of a person’s race, sex, color, religion, nationality, age, disability, or genetic information.

An employer also can’t refuse to give a reference based on these factors, but federal laws don’t guide or regulate what an employer chooses to share otherwise. Many state laws do, however.

These state laws, also known as service letter laws, require employers to give former employees or prospective employers letters that disclose specific information. These service letter laws might share information like an employee’s pay rates, job performance, disciplinary actions, work histories, or reasons for termination. What’s included in service letter laws vary from state to state.

For example, an employer in Hawaii can share information about an employee’s job performance in their letter, and only a prospective employer can request or receive that information. Compare that to Arizona, where a service letter can share performance reviews, job description, length of employment, pay rate, professional conduct, and more. This employer in Arizona can give that information to a prospective employer as well as a former or current employee.

Many states protect employers from being sued

The information you disclose to prospective employers is based on state laws. And if your state doesn’t have laws in place, there may be a local ordinance or state administrative office that regulates information from former employers.

Like in Massachusetts, where their state laws only apply to hospitals, nursing homes, home health agencies, and hospice programs. Other businesses in Massachusetts would have to contact their state labor department for guidance.

So what happens if you disclose information to a prospective employer, and your former employee isn’t happy about what you said? As an HR representative, you’re likely very careful with how you answer questions from prospective employers already. But something that may seem innocuous to you may seem like defamation to your former employee.

Luckily, the following states specifically protect companies from being sued for defamation in a service letter:

  • Alaska
  • Arizona
  • Arkansas
  • Colorado
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • New Mexico
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Virginia
  • Wisconsin

Because employers in California, Missouri, Montana, Nebraska, Nevada, Washington, and West Virginia aren’t protected from being sued, you must be extra careful to follow the regulations that are in place when providing a reference to a prospective employer.

That doesn’t mean you’re completely off the hook and free to say what you like in the states that do protect employers, though. Many of the employer protections come with certain conditions. You’re generally immune from liability unless you mess up by:

  • Providing false or misleading information
  • Failing to get employee consent before releasing their information
    Violating a nondisclosure agreement
  • Violating the employee’s civil rights
  • Violating federal, state, or local laws about confidentiality
  • Giving information that’s irrelevant or was not asked for by a prospective employer
  • Sharing information with an intent to harm or defame the employee

Write your references correctly

When writing up references, no matter what state you’re in, it’s critical that you disclose information correctly. Many states have regulations for how and when you must provide a reference. Some information has to be in writing, and other information doesn’t have to be.

In Kansas, for example, an HR rep can disclose information about an employee’s length of employment, pay level, work history, job description, and duties in person or over the phone, but performance evaluations and reasons for termination or separation must be in writing.

Many states also require employers to respond within a certain time frame after they receive a request. That time frame can range anywhere from 10 days of receiving a request (Delaware) to 45 days (Missouri). In Montana, the law states “within a reasonable time.” You’d have to check in with your state labor department to define what that means.

Sometimes you also have to give certain information to your former employee, too. Some states like Wyoming or Virginia are only required to disclose information to prospective employers, but employees in other states can ask for their own copy of a service letter, too.

A former or current employee in Texas can request a service letter from their employer, who must respond in writing within 10 days of receiving that request. The employer also has to disclose the names of people to whom that information was given, like an HR representative with the employee’s possible new employer.

Know your laws and protections

The bottom line on providing references? Be informed about your state laws and know your rights as a business. Know what information you can disclose in a reference, who you can share that information with, and whether you have to respond within a certain period.

Be sure that you’ve gotten permission from your former employees if necessary, and that your service letter follows any required format and includes required signatures. Understand how state laws can protect you from defamation and how you might be left unprotected if you make a mistake in a service letter.

Be prepared and informed on your state laws so you can focus on giving honest, helpful employee references. It’s just good policy.