By Howard Levitt

Original Source: National Post

My first column for the Post, in 1998, was headlined “If You Can’t Say Something Good, Say Something Bad.” Its subject was employment references. There had never been a Canadian court case on references so my analysis was based on broader principles of libel and negligence law. But now there is.

Adam Papp worked for two and a half years as a staff economist with Stokes Economic Consulting. Stokes had to cut costs and Papp was let go. Papp’s major project was complete and, because he had a Masters degree, his income was higher than that of his peers.

Papp called the owner, Ernest Stokes, asking if he could list him as a reference. Stokes agreed, wrongly assuming that any reference would be limited to Papp’s technical proficiency. Papp then applied for a job with the Yukon Government as a statistician, listing Stokes as a reference. Yukon agreed to hire him “if his references checked out.” Papp told Stokes that he was likely to be hired and to expect a call.

But the interviewer, Amanda Ho, told the court about her conversation with Stokes. Her notes (which she admitted were not verbatim) included an exchange that went somewhat like this:

Q: How would you rate his quality of work?

A: We were not that pleased.

Q: Describe whether he gets along in a team setting?

A: Not well.

Q: How well does he get along with his co-workers?

A: Not greatly.

Q: Does he have well-developed, good working relationships?

A: I did not see any evidence of it.

Q: What could he improve on?

A: See above.

Q: Would you re-hire?

A: No way.

Ho informed Papp that Stokes’ reference eliminated him from contention. Papp sued for defamation.

Stokes testified that, after he agreed to provide the reference, he spoke to other employees and learned of their dissatisfaction with Papp’s behaviour. He disagreed with some of Ho’s recorded answers, but acknowledged stating that he was not pleased that Papp could not get along with staff.

Justice Miller of the Ontario Superior Court of Justice found that Stokes’ comments were inherently defamatory as they would lower Papp’s reputation. However, Stokes had two complete defences. First, the Court found that what Stokes had said to the interviewer was “substantially true.”

Of greater interest, the Court held that, even if had what Stokes advised the Yukon Government been entirely false and cost Papp the new job, Stokes still could not be successfully sued because reference checks enjoy a “qualified privilege.” That means that, unless they are made maliciously (i.e. if Stokes knew that what he said was false or was reckless or indifferent to its truth or falsity), he could not successfully be sued for slander. In this case, Stokes had a reasonable basis for his opinion and, before giving his reference, he had verified its accuracy by eliciting other opinions.

Papp also sued for wrongful dismissal. Given his two and a half years of service, $70,000 salary, and the fact that he was in his early thirties, the Court awarded four months’ pay. After his original severance, that award amounted to only $17,193, below the Small Claims Court’s $25,000 limit. Generally, if an employee sues in the Superior Court and recovers under the limit, he will be deprived of any costs. One can assume that with the cost of all the preliminary steps (pleadings, discovery, etc.) through to a three-day trial, even after recovering this award, Papp would be considerably out of pocket.

The broader message flowing from this case is that Canadian employers’ customary approach of not providing fulsome references, but confirming only position and length of service, is wrong-headed. Employers can provide a particularly harsh reference if they honestly believe it to be true and are not careless in providing it. This is the case even when that reference directly costs the employee a job.

References are one of employers’ few motivational tools. If an employee knows that great or desultory performance will be rewarded with the same reference, and that if they’ve done a poor job no future employer will ever know, the results are obvious. Also, employers need to receive honest references to make their hiring decisions. They are more likely to receive them from other employers if they provide them themselves.

So, provide fulsome references. Doing otherwise isn’t fair to either your employees or your own company.