Be Careful in What You Say

Defamation suits can crop up at any stage of the employment cycle. Performance reviews, investigations, demotions, terminations and references can all seed the ground for a nasty legal battle. Yet these are essential HR functions. Marlene Muraco, an attorney for San Francisco-based employment law firm Littler, Mendelson, Fastiff, Tichy and Mathiason, talks about how to do your job in the most legally defensible manner.

Can you begin with an overview of defamation law?
To have a claim for defamation, plaintiffs have to prove at least three and possibly four things, depending on exactly what the claim is. First, the key to the defamation claim is it has to be an untrue [statement]. Second, it has to be a defamatory statement of fact about the plaintiff. And the third thing is it has to be published to a third party by the defendant—the person being sued for defamation. Publication would be a statement. It could be in writing; it could be orally. I want to emphasize [the importance of the] third party. In other words, if you and I are alone in a room and I say to you, “You’re a thief,” that’s not defamation. I haven’t said anything to a third party. The possible fourth thing [to prove] would be injury to the plaintiff or damages. [Plaintiffs] have to be able to prove damages. They don’t always have to prove [they suffered] monetary damages, because some types of statements are considered to be so bad that plaintiffs are allowed to collect damages [for harm] to the[ir] reputations without proving that they actually suffered monetary loss.

What would be an example of that kind of statement?
Certain kinds of statements are known as defamatory per se. They’re the [three] following kinds of statements: accusing somebody of having committed a criminal offense, accusing somebody of being infected with a “loathsome communicable disease” such as AIDS, or accusing a person of an inability to perform the duties of his or her job. But it has to be something more than “he messed up his project.” It really has to be he’s totally incompetent, and he just can’t do something that’s really an essential function of his job.

Because so many defamation suits stem from the termination process, how should a company conduct a termination to avoid a suit?
To avoid any implication of defamation when you’re doing a termination, there are a couple things to think about. If somebody’s being terminated, he or she is being terminated presumably because the person did something wrong—poor performance or some kind of misconduct. So there are all kinds of things leading up to the termination, [such as] your investigation into whatever it is the employee did or the counseling procedure if somebody had poor performance. All of those [types of] activities have the potential for a defamation claim.

What’s an example?
For instance, if an employer gives an employee an evaluation, and it has statements in it that accuse the employee of criminal conduct, dishonesty or incompetence, there have been situations in which the employer has been found liable if in fact those statements and evaluations were false, and the person who wrote them down knew they were false when he or she wrote them down. Or [the individual] should have known they were false. For instance, I accuse you of theft in your evaluation, and I should have had reason to know that in fact you weren’t the one who stole the computer. So the first thing [managers] want to do when writing employee reviews, obviously, is be very careful that anything that’s in there is objectively verifiable and not somebody’s wild guess about what’s going on. Statements of opinion can’t be defamatory, so anything that’s the supervisor’s opinion, as opposed to something that’s a statement of fact, wouldn’t be actionable as defamation. But to the extent the supervisor says, “You did this and you did that,” you want to make sure that it’s a fact. This is why a lot of times companies have policies that their HR departments review employee reviews before they give them out, to make sure everything in there is OK.

In what other ways do defamation suits arise?
Another way [defamation occurs] is when you fire somebody, and then other people want to know why the person was fired. For instance, there are a couple of cases in California in which somebody was terminated for sexual harassment. And then the employer went back to the workforce and said, “Just to re-emphasize our policy on sexual harassment, we want you to know that we recently terminated somebody for sexual harassment.” So then the person [who was] fired sued for defamation. I think in most jurisdictions the conclusion is that discussions within a corporation are going to be protected, that employers won’t be held liable for them as long as the communications are made in good faith and are essential to the termination. In other words, they’re communicated to people who have a need to know, like the person’s supervisor, or perhaps the other people in the department. But even communications within a corporation that aren’t necessary—in other words, the supervisor is working late one night, and the janitor comes in and asks, “Whatever happened to Jim?” [And the supervisor replies,] “Oh, we fired him because we caught him sleeping on the job.” That kind of thing could be defamatory. Basically the bottom line is the employer wants to make sure that communication about the reasons for the termination, even within the corporation itself, are really limited to the people who have a business need to know.

What should HR keep in mind when conducting an investigation—say on sexual harassment—to ensure the employee being investigated isn’t defamed?
In the event that HR is investigating somebody’s conduct, HR wants to compartmentalize the investigation as much as it can. So only give information out to those people who need to know and who are participating in the investigation. And only tell them what they need to know. If there’s a written report made because of some kind of investigation, they don’t want to circulate the written report beyond the people involved in the discipline process, who have a need to know. The same thing applies if you’re meeting. A lot of times employers will have an extra person in a meeting [who is] with an employee [under investigation]. If the extra person there is an HR person, that’s OK. Obviously though, you wouldn’t want it to be a co-employee whom you just want to have there for a witness. That could create [cause for] a defamatory suit.

What about escorting terminated employees from the building—there have been several defamation lawsuits around that.
I don’t think there’s any problem with escorting somebody out of the building. That’s OK, as long as nothing’s said. If you’re escorting the person out of the building, and other employees stop and say, “What’s going on?” and they’re given a full explanation, that could be defamatory provided it turns out to be false.

What should HR know—and advise managers—about giving performance reviews?
The best protection against defamation is always that it’s the truth. It’s an absolute defense to defamation. So again, the best protection and the safest way to defend a statement is to put down the truth. And the second-best defense is to act in good faith. In [some states] there’s what’s called a qualified privilege for the information that you put down in the performance review. That means that as long as the person who makes the statement is acting in good faith, he or she won’t be able to be held liable for defamation, even if what he or she wrote down ultimately turns out to have been false. It’s a recognition that these people need to do business, and that if they’re at risk for defamation every time you take a business action, they’re going to have a problem—because most people don’t agree with what’s on their performance reviews all the time.

How can an employer safely give references on a former terminated employee?
The safest thing to do is to have a policy that says you’re just going to give name, rank and serial number. One of the reasons that’s advisable is that it protects you against claims of self-compelled defamation.

What’s that?
This is unbelievable. Here’s the theory. You terminate somebody and give him or her a false and defamatory reason for his or her termination, such as that the person you [terminated] harassed somebody or stole [something]. The employee then [interviews with] a prospective employer. The prospective employer’s going to say, “Why’d you leave your last employ?” And [the former employee is] going to feel compelled to say, “Because they accused me of stealing.” Courts in many jurisdictions have found that [this] can be actionable defamation, even though the employer’s not the one making the statement.

So it’s really ridiculous if you think about it. It puts the employee in charge of when the cause of action arises. That’s because there’s a statute of limitations for all claims. But with a self-compelled defamation claim, the person could think, well my statute of limitations is about to run out. I know, I’ll go out and tell somebody—now I have a whole new claim!”

So how does an employer get around that?
Give only name, rank and serial number. Then the employee can’t feel compelled to tell another employer why he or she was let go. If the reference is checked, the new employer will just get name, rank and serial number. So you want to have that kind of policy and publicize that you have that kind of policy. However, if employers do choose to give references, they have to give accurate ones. You don’t have an obligation to speak, but if you do speak, you better speak completely. If you choose to give a reference, and you say something that’s false, clearly that can be defamatory. If you choose to give a reference, and you give a good reference even, you can still get nailed.

How’s that?
There was a case in California recently. What happened in that case was that a school administrator was going to get a new job. He applied to the school, and the school called his previous employer. The previous employer gave a glowing representation, talking about this guy’s good rapport with students. So the guy gets hired and gets caught engaging in sexual misconduct with one of the students. During the course of that lawsuit [the school officials] find out that there was this glowing reference given by his previous employer. They also find out that in fact the previous employer had been fully aware that this guy had problems with female students. At his previous employer he had been engaging in sexual misconduct, and in fact had been forced to resign from a previous school because of complaints lodged against him. [The school officials] knew this. Despite that, they gave a glowing reference. The court said, “Although policy considerations dictate that ordinarily a recommending employer should not be held accountable for failing to disclose negative information regarding a former employee, nevertheless liability may be imposed if the recommendation letter amounts to an affirmative misrepresentation presenting a foreseeable and substantial risk of physical harm to a perspective employer or third person.”

So say you have an employee who was terminated for something that was harmful to a third party—violence or sexual harassment—and someone calls for a reference. The employer gives a positive reference and doesn’t mention what they know about. The employer can be held liable to any third party who subsequently gets injured. The people that just give the name and rank will be OK, because they didn’t make an affirmative misrepresentation.