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Thelen Reid Brown Raysman & Steiner LLP
On
January 27, 1997, the California Supreme Court gave employers
additional cause for concern about providing letters of
recommendation when it decided a case entitled Randi
W. v. Muroc Joint Unified School District (1997) No.
S05144, 97 DAR 965. For the first time, the California
Supreme Court has held that "recommending" employers
may be liable for negligently or intentionally misrepresenting
an employee's performance fitness in their letters of recommendation.
In Randi W., a student sued the Muroc Joint Unified
School District and the state, after her vice principal,
Robert Gadams, allegedly sexually molested her. Plaintiff
contended that Muroc officials acted negligently and committed
fraud when they recommended Gadams for a vice principal's
post even though they knew that Gadams repeatedly had been
the subject of sexual harassment charges by female students
at another school. The District's recommendation letters
never disclosed the sexual allegations against Gadams; rather,
the District offered unreserved praise for his work.
The plaintiff alleged that the District had an obligation
to "complete the picture" by disclosing material
facts regarding these complaints.
The trial court sustained Muroc's demurrers to the negligent
misrepresentation and fraud causes of action. However,
the Supreme Court reversed, holding that the author of a
letter of recommendation owes a duty to prospective employers
and third persons not to misrepresent facts in describing
the qualifications and character of a former employee, if
making such misrepresentations would present a substantial,
foreseeable risk of physical injury to the subsequent employer
or a third person. The Court also concluded that absent
physical injury or a special relationship between the former
employer and the injured party, the former employer would
not be liable to third persons, but may still be liable
to the new employer.
As many employers know, the California legislature created
a "qualified privilege" in Civil Code §47(c),
under which former employers who communicate with prospective
employers are protected from defamation actions initiated
by former employees. Under Section 47(c), so long
as the prospective employer requests the information from
the former employer, and the former employer acts without
malice, the communication is privileged, and the former
employee cannot later recover from the former employer under
a defamation theory. The Randi W. Court expressly
acknowledged the existence of the Civil Code §47(c) qualified
privilege, but concluded that the privilege does not insulate
employers from all liability arising from employment disclosures,
especially where new employers and third parties seek recovery
for injuries caused by negligent omissions or fraudulent
disclosures.
Impact on Employers
By allowing the recipient of a letter of recommendation
(and possibly a third party) to assert a cause of action
for negligent misrepresentation and/or fraud against the
letter's author, the Court has indicated that it is not
in an employer's legal interest to write letters of recommendation.
In light of Randi W., liability may result if an
employer omits some negative conduct from its reference
letter, no matter how reasonable the omission.
Candidly, the former employer is placed in a predicament
regarding what to tell a prospective employer. If
an employer provides an incomplete recommendation, it may
be liable for the lack of full disclosure. For example,
where an employee is accused of sexual harassment, but the
allegations are not proven, the employer has a dilemma:
should it disclose the unproven allegations? If it
does not, the employer could be liable under the Randi
W. rationale if the alleged harasser sexually assaults
a co-worker at the new workplace.
Related U.S. Supreme Court Opinion
The recent United States Supreme Court decision in Robinson
v. Shell Oil Co., 1997 U.S. LEXIS 690 (February
18, 1997) also demonstrates potential liability for negative
references. In Robinson, the plaintiff alleged
that his former employer, Shell, had given a prospective
employer a negative reference in retaliation for Robinson
having filed an EEOC charge against Shell. Reversing
the Circuit Court of Appeals, the Supreme Court held that
Robinson - a former employee - could sue his former employer
asserting retaliatory discrimination under section 704(a)
of Title VII.
It appears that an employer's safest course of action is
to refrain from writing recommendation letters. The
best guarantee against potential liability is a "no
letters" policy: in lieu of a recommendation letter,
the employer merely confirms the former employee's position,
salary, and dates of employment.
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For more information about the issues covered in this report, please contact Linda S. Husar in our Los Angeles office at 213-576-8017 or at lshusar@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©1997 Thelen Reid Brown Raysman & Steiner LLP
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