We often get questions from employers about how to manage a reference check for an employee who has been terminated.  The perceived concern is that if you give a bad reference, you could be liable for damages in defamation to the departing employee.  On the flip side, if you give a good (but perhaps misleading or false) reference, there is concern that you could be liable for damages to the departing employee’s new employer for a false representation.

A recent Ontario decision (Papp v. Stokes et al., 2017 ONSC 2357) has ruled that an employer is not liable for defamation after giving a bad reference because the statements made were the truth and were made without malice.

The background on this story is that the employee, Adam Papp, was terminated from his employment at Stokes Economic Consulting Inc. after just under three years of service. He asked the President of Stokes to serve as a reference for him.  Ernest Stokes agreed to do so but was under the impression that he would simply be asked to confirm what work Mr. Papp had performed for the company.

After interviewing for a new job, Mr. Papp was informed that he was the highest rated candidate and that reference checks would have to be performed.  A job offer, however, was never made and the prospective employer cited the reference given by Mr. Stokes as the reason why.

Ernest Stokes told the prospective employer that Mr. Papp does not get along well in a team setting and does not get along with his co-workers. In answer to the question of whether Mr. Stokes would rehire Mr. Papp, Mr. Stokes said “No way”.

Mr. Papp sued Stokes for wrongful dismissal but added a defamation claim based on the reference check given by Mr. Stokes.  The court accepted that Mr. Stokes’ statements were defamatory because:

1. the statements would tend to lower Mr. Papp’s reputation in the eyes of a reasonable person;
2. the statements in fact referred to Mr. Papp; and
3. the statements were communicated to at least one person other than Mr. Papp.

However, Stokes successfully raised the defence of truth and qualified privilege.  In arriving at the conclusion that the statements were true, the Court accepted the evidence of Mr. Papp’s former co-workers that he was, in fact, difficult to work alongside.

The qualified privilege defence recognizes that there are certain communications that serve a greater purpose that should be protected from defamation claims.  Reference checks are one of those types of communications.  As long as the communication is not made maliciously, the defence of qualified privilege is available.  The Court found that Mr. Stokes did not act maliciously in giving the reference that he did as he genuinely believed it to be true.

This case is obviously helpful for employers as it confirms protections from defamation liability for a bad reference.  Employers, however, should ensure that bad references can be supported by facts or by the accounts of others.