Is an employer prohibited from providing a reason for separation when verifying past employment?
No — an employer can provide reasons for separation/termination, but many employers are uncomfortable doing so due to concerns about a lawsuit from a former employee for defamation.
Truth is an absolute defense to any claim for defamation but defending such a lawsuit can be an expensive saga.
For that reason, many employers prefer to simply provide dates of employment and position held. Other employers do provide a wealth of information, and again — as long as they are being truthful, the law protects them.
Future employers depend, to a certain degree, on getting information about applicants. It is helpful to find out if an applicant was frequently late, missed work often, was insubordinate, etc.
Accordingly, it is important to develop a policy of precisely what you will/will not provide when you get that call for a reference. It also is advisable to have a specific person designated to provide whatever information you decide to provide, so your practice is consistent.
It also is imperative to make sure that in providing information, you don’t base it on a discriminatory reason. For example, if an employee was frequently late but the lateness was due to a physical problem, tardiness should not be cited. If you think an employee was a troublemaker, but indeed he/she was a whistleblower, it should not be mentioned.
Answers ‘Without Malice’
The Civil Code Section 47(c) offers protection when answering the question of if a former employee is, or is not, eligible for rehire as long as the statement is made “without malice.” It can be very telling to hear such a response from a former employer.
Last, there are cases on “negligent referral.” This occurs when the former employer provides little or no information on an ex-employee. When that failure causes harm to an innocent third party, the new employer can sue the previous employer for failing to disclose information the employer knew to be true and should have reported.
Negligent referral cases are not common, but there is that body of law that could come back to haunt a former employer.
Once an employer decides how to handle reference requests, it is a good idea to run the policy by an attorney to assure that it is a good course of action.