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Employee Reference Policies

Summer 1995

Many employers have implemented very restrictive policies on providing references on former employees to subsequent employers. This trend has been a reaction to the growing number of lawsuits filed by disgruntled former employees alleging negative recommendations from a previous employer.

Although it has been good advice to follow restrictive reference policies, there have been a growing number of cases outside of Wisconsin recognizing the tort of negligent supervision, negligent hiring, and negligent referral which may require a rethinking of this approach.

In Midwest Knitting Mills, Inc. v. U.S., 950 F.2d 1295, the Seventh Circuit stated, "The Wisconsin Supreme Court has never explicitly recognized the existence of this tort (negligent supervision) by holding an employer liable for negligent retention or supervision of an employee. However, we have no reason to believe that Wisconsin would reject this cause of action." In a recent case, Pritzlaff v. Archdiocese of Milwaukee and Arizona Health Care Costs Containment System and Health Care Financing Administration , the Wisconsin Court of Appeals, District I [Case No. 93-1846 (1994)], remanded the issue of negligent supervision to the Circuit Court for determination.

The tort of negligent hiring, arising from an employer's negligence to properly check the background and references of an employee who subsequently harms others in the work place is being recognized by numerous courts throughout the country.

Awareness of this trend is confirmed by the increasing numbers of employers pursuing far more complete and thorough reference checks on prospective employees.

The tort of negligent referral arises when a former employer does not reveal, upon the request of a subsequent employer, information about a former employee suggesting that the employee has endangered the safety and property of employees in the work place. For example, if an employee is found guilty of sexual assault and the former employer is aware of that fact and if such information is not provided upon a request for a reference from a subsequent employer, is the former employer liable if the employee in the subsequent work place sexually assaults another?

It may be advisable to provide subsequent employers with any information verifying criminal convictions by former employees rather than relying on a policy of "no references" - certainly there is no liability for providing public information to another employer and it would reduce potential liability for "negligent referrals." The question obviously becomes more difficult for the former employer when the potentially threatening and harmful activity of the employee is not proven in the courts.

It is suggested that former employees be asked to sign waivers regarding information provided to subsequent employers and that former employees be informed that any information regarding proven criminal activity or conduct endangering others will be shared with subsequent employers if the previous employer is listed as a reference for future employment. Often this notice will deter former employees from even listing a former employer as a reference.

Although Wisconsin does not at this time explicitly recognize the torts of negligent hiring, negligent supervision and negligent referral, this is an area of increasing judicial activity and it is advisable to consider these issues in the administration of a company's employee reference policy.

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