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.
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 for defamation of character.
South Dakota is among the states that have enacted a reference immunity law. Under South Dakota law, an employer is presumed to be acting in good faith when making a written disclosure about a current or former employee's job performance to a prospective employer at the written request of either the current or former employee or the prospective employer (SD Stat. Sec. 60-4-12). Unless the presumption of good faith is rebutted by clear and convincing evidence, the employer may not be held liable for the disclosure or its consequences. The presumption of good faith can only be rebutted by proving that the employer:
• Recklessly, knowingly, or with a malicious purpose disclosed false or deliberately misleading information; or
• Disclosed information subject to a nondisclosure agreement or information that is confidential under any federal or state law.
Employees and former employees are entitled, upon written ...