Whether they like it or not, business owners often find themselves amidst conflict. Sometimes this friction is caused from the negotiation of a contract or laying out a business plan with partners. However, some conflict arises from interactions with employees. This is particularly true in the hiring and firing process. If these issues are handled improperly, then a business may find itself at the center of litigation, which can be bad for a business's reputation and bottom line.
One way this can occur is when a business or business owner is accused of defamation. In order for a court to find that defamation has occurred, a plaintiff must show that his or her reputation was damaged by statements that the defendant knew were false. Therefore, when former employers are contacted by potential employers, the former employer needs to be careful about what he or she says.
One way to avoid this sticky situation is to notify employees upon their termination that a positive recommendation will not be provided. It is probably best to commemorate this in writing, though, just in case an employee uses the former employer as a reference and something negative is said to the potential employer. Another thing a business can do is have a dismissed employee sign a release from liability, which will allow the employer to discuss the employee with future employers.
Being called by a former employee's potential employer can seem like a small thing. But if handled improperly or if the employee's termination itself was handled inappropriately, then the legal consequences can be huge. This is why those accused of wrongdoing in the business world, whether breach of contract or defamation, should consider the best way to approach their legal issues.