Reference checks are a useful way for employers to gather information about applicants that they might not discover through the application and interview process. However, despite the usefulness of reference checking, many employers are legitimately concerned about lawsuits from former employees based on information provided in response to a request for a reference and liability for the actions of employees where the company failed to conduct a thorough reference check. Kentucky recognizes a cause of action for negligent hiring and retention if it is shown that the employer knew or should have known that (1) the employee was unfit for the job, and (2) the employee's placement or retention in the job created an unreasonable risk of harm to a third party (Oakley v. Flor-Shin, Inc., 964 S.W.2d 438 (KY Ct. App. 1998)).
To deal with employers' reluctance to provide information about former employees, a number of states have enacted laws “immunizing” employers against employee claims over such disclosures. The immunity laws generally provide protection from claims by former employees for defamation of character.
Kentucky is among the states that have a reference immunity law (KY Rev. Stat. Sec. 411. 225). Under Kentucky law, an employer who provides information about the job performance, professional conduct, or evaluation of a current or former employee to a prospective employer, at the request of the employee or prospective employer, is immune from civil liability unless the employee proves that:
• The employer disclosed information knowing it was false, with reckless disregard for whether it was true of false, or with the intention to mislead the prospective employer.
• Disclosure of the ...