Employee Lawsuits: Fighting and Avoiding Defamation Liability

Employer defenses and liability avoidance strategies

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Employer Defenses

Potential defendants in a defamation action are apt to quote the old "saw" that "truth is an absolute defense." While it is true that a plaintiff cannot succeed in a defamation claim without establishing the falsity of a published statement, no plaintiff alleging defamation is ever going to admit that the statement he claims is defamatory is actually true. Therefore, the truth or falsity of a published statement will almost always be an issue for resolution at trial. A jury will determine whether an employer's statement that disparages an employee's reputation is true or false. The odds do not favor the employer in such a scenario.

Another defense that defendants are apt to seize upon in a defamation case is the argument that the published statement was intended as an opinion and not fact. While it is true that a statement that is purely an opinion will usually not be defamatory, liability may attach if the opinion implies an assertion of undisclosed facts or where the opinion is primarily an assertion of facts even though it is framed in "opinion-like" language. Thus, statements that a co-worker was a "fluffy," "bitch," or "flirtatious" were held to be "too imprecise" to be defamatory by a Minnesota appellate court. The court said that the "social context" of the statements (that they were made as part of "office gossip or banter"), would not lead a listener to believe they were statements of fact. In contrast, however, a supervisor's statement that he "had reason to believe an employee had sabotaged a corporation's computers" was ruled not to be pure opinion and thus actionable by the Supreme Judicial Court of Maine. The court said that a jury might reasonably conclude that the supervisor's expressed "suspicion" implied the existence of undisclosed defamatory facts. These cases demonstrate that the line between fact and opinion is not always clear.

A better defense for employers is to make sure that any statements about employees, whether made orally or as part of written evaluations or discharge notices, come within the qualified privilege that exists for statements made without malice, that is, where the employer is unaware of the falsity of the statement or is not reckless with regard to the truth or falsity of the statement. A North Carolina Court of Appeals decision demonstrates the applicability of this defense to a defamation claim brought by a terminated employee. The employee, a mental health worker, was alleged to have had sexual relations with a minor female patient at the hospital. The incident was discovered when a fellow employee reported that he had heard allegations of such misconduct from a third employee. The plaintiff sued both the employee who reported the incident and the employer alleging slander and intentional infliction of emotional distress. The trial court granted summary judgment to the hospital and the plaintiff appealed.

The court discussed the qualified privilege argument. The court noted that the reporting employee was directly responsible for patient care and had an ethical if not employment-based duty to report any allegations of abuse to the hospital. The allegations were made only to the employee's immediate supervisor and to other employees of the hospital who were directly involved in investigating the misconduct. The court noted that the hospital had a duty to investigate the charges of patient abuse and to report them to the state protective services agency. Thus, the scope of privilege was not exceeded by excessive publication of the statement to individuals who had no need to know.

This decision demonstrates that the courts will respect the right of an employer to communicate allegations of misconduct internally and to investigate those allegations when the employer does so in a reasonable and conscientious manner. The key to defending such cases is to ensure that the defamatory communication is treated as confidential and is not communicated to the general public or to other employees who are not directly involved in the investigation. Reports to outside agencies or to the police will not necessarily destroy the privilege, particularly if they are required by law or if there is reasonable suspicion that a crime has been committed.

How to Avoid Defamation Liability

An employer should take the following steps to avoid liability for defamation claims.

  • Investigate all disciplinary and discharge decisions thoroughly.
  • Personnel documents regarding an individual employee (evaluations, disciplinary notices, or discharge letters) should only be circulated among individuals with a demonstrated need to review such documents as justified by business necessity.
  • Do not broadcast the reasons for termination to the assembled work force or even to members of the discharged employee's department. Do not post a notice regarding a discharge on a bulletin board.
  • Do not respond to questions from employees who were not involved in the incident or conduct that led to a termination decision. These employees should be told that it is a confidential personnel matter. Do not respond to questions from nonemployees.
  • Provide only a "neutral reference" to other employers, verifying dates of employment, position, and salary.
  • Do not provide additional information beyond a neutral reference unless the ex-employee provides you with a written waiver of all possible claims relating to the release of information. Even then, be very cautious; courts have ruled that ex-employees cannot consent to the publication of defamatory information.
  • Develop a written policy for providing references that designates a specific managerial official as the response person for such inquiries. Supervisors should be instructed by the policy to refer all requests for references to the designated official.
  • Keep all medical information confidential. Again, release of such information to designated persons should be authorized in a written consent-for-release form signed by the employee/patient.
  • Do not communicate any drug test results to persons without a business-related need to know the results.
Excerpted from Slam the Door on Employee Lawsuits: Keep Your Business Out of Court. Copyright 1998 by Paul M. Lusky. Published by arrangement with Career Press.
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