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. This creates a catch-22 for employers. A detailed discussion of these legal issues is available.
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. New Jersey is not among the states that have enacted reference immunity laws.
In fact, the New Jersey courts have ruled that an employer may be liable for negligent misrepresentation if it provides an inaccurate or false employment reference (Singer v. Beach Trading Co., Inc., 876 A.2d 885 (N.J. App. Div., 2005)). An employer can be held liable for misrepresenting a former employee's work history if:
• The inquiring party clearly identifies the nature of the inquiry;
• The employer voluntarily decides to respond to the inquiry and unreasonably provides false or inaccurate information;
• The person providing the inaccurate information is acting within the scope of his or her employment;
• The recipient of the incorrect information relies on its accuracy to support an adverse employment action against the employee; and
• The employee ...