Can an Employer Be Liable in Defamation for Giving a Bad Reference?

Yes, but only if it’s untrue and the employer acted maliciously.

Anyone would feel aggrieved if they lost a job opportunity because of a bad reference — especially if what was said about them was untrue.

This is what motivated two employees to sue their former managers for defamation in two recent Ontario cases. The employees lost. This article considers the 252-year-old reason why.

Kanak v. Riggin

The plaintiff in one case, Kanak, had received a conditional offer of employment, but the offer was revoked because her former manager, Riggin, provided a bad reference.

Riggin reported that there was a “a lot of conflict” with Kanak, that she “did not take directions well,” that she was “narrowly-focused,” that she “did not handle stress well,” and that Riggin would not re-hire her.

Papp v. Stokes

The plaintiff in the other case, Papp, was the first-ranked candidate for a new position, but his opportunity evaporated because his former manager, Stokes, provided a bad reference.

Stokes reported that Papp was “ok in computing,” but that he “had a chip on his shoulder,” that he did not get along “greatly” with his co-workers, and that there was “no way” Stokes would re-hire him.

Defamation

In each case, the manager’s statements were regarded as presumptively defamatory in the sense that they would tend to lower the employee’s reputation in the eyes of a reasonable person.

Justification

In Papp’s case, Stokes succeeded in his defence of “justification,” proving that his statements about Papp were “substantially true.”

But, even if the court had found the statements to be untrue, both managers in Papp and in Kanak succeeded on a second defence.

Qualified Privilege

The managers argued that their defamatory statements were made in a legally protected context.

When a manger gives an employment reference, it is said to be an “occasion of qualified privilege.” This means that, even if the statements are untrue and defamatory, the manger will not be liable unless they also had malice.

The court rejected Papp’s argument that Stokes “had an axe to grind” as well as Kanak’s argument that Riggin had developed “a spite or ill-will toward her.” The managers honestly believed the truth of their statements. By failing to prove actual malice, the employees lost their cases.

But who says employment references should receive the special protection of this “qualified privilege,” requiring proof of actual malice?

Lord Mansfield Says

This very old rule of law is credited to Lord Mansfield, Lord Chief Justice of the King’s Bench from 1756 to 1788.

In 1766, Lord Mansfield heard a defamation case between a servant and her former mistress.

The servant lost a job opportunity when her former mistress told another Lady that the servant was “saucy and impertinent, and often lay out of her bed: but was a clean girl, and could do her work well.”

Lord Mansfield reasoned that the “gist” of a defamation claim is malice. But malice could not be “implied from the occasion of speaking” (i.e. on the private and confidential occasion of giving a job reference). Rather, malice had to be “directly proved.” So, without actual evidence of malice, the claim would fail.

In 1769, Lord Mansfield reiterated this rule that a “former master” could only be liable for a bad character reference if there were “extraordinary circumstances of express malice.”

By 1786, Lord Mansfield was evidently growing tired of repeating himself. The Chief Justice interrupted oral argument in another case to say, “I have held more than once that an action will not lie by a servant against his former master for words spoken by him in giving a character of the servant.”

The court went on to again clarify that the defamatory words must be both false and malicious.

The Common Convenience and Welfare of Society

As the law developed, the courts expanded upon the rationale for this rule.

In 1834, the rule was justified on the basis that “such communications are protected for the common convenience and welfare of society” because the speakers are under a “private moral duty” to speak.

This rationale has been subsequently adopted by Canada’s highest courts and remains law today. The recognition of privileged occasions is said to be the law’s acknowledgement that “false and defamatory expression may sometimes contribute to desirable social ends.”

The Desirable Social End

It was on this historical backdrop that the court in Kanak’s case justified the rule as follows:

“The social policy underpinning the protection of employment references is clear: an employer must be able to give a job reference with candour as to the strengths and weaknesses of an employee, without fear of being sued in defamation for doing so. Without this protection, references would either not be given, or would be given with such edited content as to render them at best unhelpful or at worst misleading to a prospective employer.”

Undesirable Social Sacrifices

But society’s interest in the unrestrained exchange of employee references may be overstated. Today, prospective employers have other ways of assessing the suitability of potential employees, such as by using a rigorous interview process or by implementing a probationary period.

It is not socially desirable for the livelihood of employees to be interminably constrained by a former employer’s carelessly inaccurate job reference, sometimes given years after employment ends. The fear of burning bridges may also deter many employees from attempting to assert their legal rights in the workplace.

Would it be truly so hard if the law required employers to ensure that their job references were truthful? If this greatly diminishes the usefulness of employment references or discourages them from being used at all, will society really suffer in any substantial way?

Who Has It Harder?

In one 1846 case, a ship captain was dismissed when reports of the captain’s drunkenness were relayed to the ship owner by a stranger who felt morally obligated to report what he had learned in a letter from the ship’s first mate. The captain sued the stranger in defamation.

In considering whether these circumstances attracted the protections of qualified privilege, Justice Coltman described both sides of the social context:

“The duty which may be supposed to exist to give advice faithfully to those who are in want of it, has been allowed to prevail for the sake of the general convenience of business, though with some disregard of the equally important rule of morality, that a man should not speak ill or falsely of his neighbour. … It may be said, that it is very hard on a defendant to be subject to heavy damages where he has acted honestly, and when nothing more can be imputed to him than an error in judgment. It may be hard: but it is very hard, on the other hand, to be falsely accused.”

It is also very hard to be out of work because your well-meaning old boss is spreading an inaccurate picture of your workplace demeanour.

Ever since Lord Mansfield first enunciated the rule, courts have cited the job reference as a “classic” occasion which attracts the protections of qualified privilege. But have times changed?

Lord Mansfield himself also once said, “…as the usages of society alter, the law must adapt itself to the various situations of mankind.”