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Can Employment Verification Requests Cost Your Company a Lawsuit?

Picture this: Your HR department receives an employment verification request for a former employee who was terminated from your company a couple months ago.

The HR employee who answered the phone is still in training and is uncertain how she should handle the call, so she makes a fatal error: She tells the person on the other line everything she knows about the former employee, including why she was fired. (All of which she overheard from coworkers in the lunchroom, and is most likely riddled with false information.)

What happens now? Can your company be held liable for the release of that information – some (or most) of which might not even be factual?

According to The Balance, "There are no federal laws restricting what information an employer can -- or cannot -- disclose about former employees. If you were fired or terminated from employment, the company can say so. They can also give a reason."

Making it a bit more tricky, The Balance goes on to say that, "State labor laws vary, so check your state labor department website for information on state labor laws that limit what employers can disclose about former employees."

This is where employers venture into dangerous territory. If you disclose anything other than fact, (and you must have documentation to back it up) whether opinion, a lie, or something you deem to be the truth, you’ve put yourself at risk for a defamation lawsuit.

And a defamation lawsuit can be a high price to pay for what might have been, to you, nothing more than a simple statement, as this court case shows:

"In Askew v. Collins, an employee of the City of Hampton drug treatment court sued the presiding judge (her employer) for defamation per se. The judge was found to have falsely stated to a newspaper that the employee had been 'institutionalized,' which was 'the only way you qualify for family leave.' Interestingly enough, the statement was not published in the paper, but merely stated to and discussed among the paper's staff."

"Even though the employee provided no evidence about the amount of damages she suffered from the alleged statement, the Supreme Court affirmed the jury's award of $350,000 in compensatory damages to the employee."

Now let's go back to the first situation described above...that former employee might now have a serious libel case against your company for the release of false information that caused her to lose out on the job - and she just might win an extravagant sum because of it.

Unfortunately, situations like this are common for a variety of reasons:

  • HR employee is new or confused regarding what is allowed/not allowed to say when employment verification requests come through
  • HR employee says something false by accident believing it to be true
  • HR employee doesn't have documentation nearby and relies on (faulty) memory
  • HR employee had a personal issue with the former employee and purposely says negative things about them to cost them the new job

Here's something else to consider: According to Find Law, "Defamation isn't just limited to factually untrue statements about a former employee. If you tell the potential employer things that you suspect or strongly think are true, but can't actually prove, then that may qualify as a statement that you "didn't know was true."

All of the above situations have the potential for a defamation lawsuit to be brought against your company. And while it may never happen - is that a chance you're willing to take?

How VerificationManager Eliminates Liability

Manual verification of employment (VOE) can put your company at risk for a lawsuit - but you can completely eliminate this threat by using VerificationManager.

Once set up, VerificationManager not only takes the potential for a defamation lawsuit out of HR's hands - and your company as a whole -- but also frees up your staff's time to take on other responsibilities.

Since HR no longer has to handle the phone calls, emails, or paper requests that go along with VOE, they're able to work on other, more important tasks.

With VerificationManager:

  • The employee is in charge of what information, if any, they release to a verifier
  • Companies only send basic information: (work history, including dates of employment and title), and income history
  • Companies are never asked to provide termination information

VerificationManager gives employees total control of what information is released and erases the threat of a defamation lawsuit by not requiring or storing information that could cause legal issues if released to a verifier.

And since VerificationManager is completely free to employers, it is the perfect solution for businesses of all sizes looking to keep their assets safe from pricey, reputation-ruining defamation lawsuits.