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Your rights to references.

FOR YEARS, MANY EMPLOYERS HAVE established policies of providing either no information or only neutral information to companies that have lawfully requested background references on former employees. The origin of these policies is uncertain, but it would be logical to assume that the image of the three wise monkeys-see no evil; speak no evil; hear no evil-lurked in the back of managers' minds at the time the policies were put in place. Employers with such referencing policies should seriously review their options and take note of the fact that the three-wise-monkey syndrome offers little protection.

In recent times, this no-referencing policy has increasingly come under fire, and the specter of negligent hiring and negligent retention hovers like a dark colossus over the business community. In Atlanta recently, five verdicts in personal injury and death cases have exceeded $10 million-and three of them exceeded $20 million.

Historically, if a worker committed a negligent act, a plaintiff would sue the worker's employer under the theory of respondeat superior-or "let the master respond." This doctrine holds the employer liable for his or her employees' negligent on-the-job actions and does not depend in any way on the fault of the employer. In fact, common law holds that employers owed their employees a duty to provide a safe place in which to work. Eventually, this duty was extended to providing safe employees, because the courts have reasoned that a dangerous coworker is comparable to a defective machine. And that is why negligent hiring and retention suits are viewed in much the same way as product liability claims.

Fundamental to a negligence action is that the defendant owe a duty to the plaintiff. A defendant owes a duty of care only to those who are foreseeably at risk as a result of the conduct of a dangerous employee. If an employer has failed to establish and maintain an adequate and consistent background referencing system, the foreseeability factor is seriously impaired and its use as a defense invalidated.

The following example of the consequences of negligent hiring may caution employers who fail to recognize the foreseeability factor.

In November 1990, CBS's 60 Minutes aired a story about the late Dr. Vilis Kruze. In 1975, while employed by Kaiser Permanente in Maui, Hawaii, as a pediatrician, he treated a four-month-old boy for meningitis. Today, Ernez Leon, now a 15-year-old, is severely brain-damaged-a permanent two-year-old who suffers constant seizures and requires continuous help to survive.

Kaiser Permanente claims that Dr. Kruze's credentials were impeccable, but 60 Minutes revealed that he was a convicted criminal, a former inmate of a mental institution, and during World War II, a member of Hitler's SS. It was further reported that Dr. Kruze had a history of drug dependency and prescribing drugs to prostitutes in return for free sex. In 1982, he was murdered by the brother of one of his drug patients. None of the three plaintiffs named in lawsuits (the other two are the State of Hawaii and the Maui Memorial Hospital) were aware of Dr. Kruze's background.

For many employers, the fear of being sued by a former employee for slander or invasion of privacy has traditionally been the reason for not providing information. Now they are faced with a much greater fear, that of being sued for negligent misrepresentation or fraud. The Restatement of Tort, which is an advisory standard used by the courts in applying liability, states: "One who in the course of his business, profession, or employment, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss to them by their justifiable reliance upon the information if he fails to exercise reasonable care in communicating the information. "

Employers can, to a limited extent, be forgiven for their reluctance to provide references on former employees because many of them are ignorant of their rights and confused by conflicting instructions from corporate attorneys and others who have a vested interest in reducing the exchange of information. An individual's right to privacy is most often quoted as an excuse not to either give or seek vital background data. The media compound this ignorance and confusion by sensationalizing circumstances where disaffected or innocent employees have successfully sued companies for slander.

Nevertheless, employers have the right-and the duty-to investigate a potential employee's work-related background carefully, and in doing so they are generally protected. According to the Restatement of Tort, "Communications between employers regarding previous work history and character of an employee are protected from claims of defamation if the statements are made 'in good faith'." Whereas one cannot deliberately submit false information about a former employer, under qualified privilege" one can seek and be provided truthful information given "in good faith."

Employers who react to potential legal threats by cutting off the flow of information are surrendering control of their business to fear. Instead of making intelligent business decisions for practical business reasons, employers are allowing business judgments to be influenced by unknown concerns. The responsible exchange of background referencing information has traditionally served the legitimate interests of employers and employees alike. It should not be suppressed by fear or ignorance.

It is time for many employers to come out of the closet and establish control over their hiring standards. Those who remain in the dark are the likeliest targets for catastrophic lawsuits.

About the Author . . . Patrick A. Dunn is president of Xukor Inc., a firm specializing in preemployment screening, in Decatur, GA. Dunn is a member of ASIS.
COPYRIGHT 1991 American Society for Industrial Security
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:employers' referencing policies
Author:Dunn, Patrick A.
Publication:Security Management
Date:Jul 1, 1991
Previous Article:The likelihood of liability.
Next Article:Drugs, Crime and the Criminal Justice System.

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