Protecting Your Business from Employee Defamation Claims
…A Performance Review Gone Wrong
After working for ABC Catering company for three years as a “set-up worker”, Thomas R. had been promoted to delivery manager, given an office in the company’s office suite, and made responsible for managing the staff of 10 “set up workers”. One of Thomas’ new responsibilities was to conduct a performance review twice a year for each of his staff, in January and July. On this day, July 1, Thomas was conducting his first performance review of Andy C., a former co-worker. Thomas had never liked Andy much and secretly thought he was lazy and dishonest. In the three months since Thomas had begun supervising Andy, Thomas frequently criticized Andy for poor job performance and even lost his temper in their discussions of those criticisms, due to his personal dislike for Andy.
Not having been trained in conducting performance evaluations, Thomas was a little nervous but also more than ready to assert his authority over his former co-worker. Thomas invited Andy in, directed him to sit in a chair in front of Thomas’ desk, and handed Andy the two page Performance Review he had prepared, using a form which had been provided by the owner. In a “comments” section on the form, Thomas had written, “On multiple occasions, Andy has failed to timely complete set-up for catering events and when confronted about his performance, Andy lied and made excuses”. The memo further indicated that Andy was being given a “written warning” and that, unless Andy’s performance improved in the next 30 days, he would be terminated.
Upon reading the evaluation, Andy got angry; he claimed that Thomas was being unfair in his criticisms since Andy performed in the same way as other set-up workers for the company. He left the meeting feeling that his job was in jeopardy and he resolved to get even.
Andy quit his job the next day and began submitting job applications with other catering companies in the area, who he knew would appreciate his excellent work ethic. He also consulted with San Diego business litigation attorneys, and hired one, who helped him file a lawsuit against ABC Catering Company and Thomas R. Along with a claim of “hostile work environment”, based on allegations that Andy C. disliked him for unjustified personal reasons and therefore had repeatedly made false accusations in the presence of other employees and even to management, that Andy was lazy, and “a liar”, the complaint alleged “defamation”. The complaint further alleged injury to Andy’s reputation and sought compensation in the amount of six figures against the defendants.
ABC Catering Company has now also had to hire a San Diego business litigation lawyer to defend in the lawsuit brought by the former employee, and the case looks problematic. It does appear that Thomas R.’s treatment of Andy C. might have been motivated by malice and dislike, an opinion formed when they were co-workers.
Does this story sound familiar? Situations like this are all too common, cause unnecessary litigation for employers, and are almost completely avoidable with the implementation and enforcement of sound employment policies, along with training of management level employees.
At this moment, defamation claims are becoming more common in workplace-related business litigation, especially in employment litigation. Such claims can be very expensive, time-consuming and distracting to any business. Therefore, business owners are well advised to consult with experienced business lawyers and defamation attorneys for advice on how to implement policies and procedures to limit their exposure to such claims. On the other hand, if your business is sued for defamation, it is important to find an experienced civil litigation lawyer to vigorously oppose such claims.
Definition of “Defamation” and How to Limit Exposure
As your San Diego business litigation attorney will inform you, “defamation” is the “tort”, i.e. “civil wrong”, of making false statements of fact that harm the reputation of a person or organization. When the false statements are oral, they are called “slander”; when they are written, they are called “libel”. No matter how hurtful or harmful or embarrassing a statement may be, if a statement is TRUE, it is not defamatory. Truth is always a defense in any defamation claim. But “truth” is sometimes subjective, and frequently difficult and time-consuming to prove in Court. Every employer should, therefore, have policies and procedures in place not only to 1) avoid making false statements about employees and former employees, and to document those efforts, but also to, 2) limit the publication of vague and potentially defamatory statements so that, even if they are possibly false, they are less likely to cause harm and more likely to be found privileged under California law. Training management level employees about the appropriate methods for enforcing policies and procedures is also imperative.
Common Contexts for Employment-Related Defamation Claims
There are several ways in which many small businesses find themselves facing defamation claims. The first, and most common circumstance seen by our San Diego business litigation lawyers, involves employee management, often relating to statements made in the course of employee discipline and firing. The second involves making negative statements about former employees, typically in response to requests for job references. A third and increasingly common context in which defamation claims are arising is in “hostile workplace” cases, where an employee claims they were subjected to a hostile work environment, including allegations of defamatory statements being tolerated in the workplace, like we saw in the above example.
Obviously, it is impossible to manage, discipline and fire employees without, at times, saying negative things which could, if made public, damage the reputation of the employee. Performance reviews would be of little value if managers were unable to comment on things like poor performance, chronic tardiness, improper behavior in the workplace, and the like. Similarly, when terminating an employee “for cause” or for “misconduct” in a situation where the employer intends to challenge the employee’s right to unemployment benefits, an employer must necessarily make negative statements about the employee.
Defenses to Defamation Claims
Apart from proving “truth” of the allegedly defamatory statements, the principal defense to employment related defamation claims is “privilege”, which can either be absolute or qualified.
The law of “privilege” in California is codified in Civil Code Section 47. Paragraphs (a) and (b) of that Section provide absolute privilege for statements made in the discharge of official duty, and in various sorts of official proceedings, which includes unemployment hearings. This absolute privilege defense also applies to statements made in legally required background inspections of potential employees or statements made in the course of police investigations into possible criminal activity. False and harmful statements made in such official proceedings cannot support a claim of defamation, even if they were made with full knowledge of their falsity, and even if they were made with malicious and hurtful intent. However, making such statements in an official proceeding will not operate to retroactively immunize the same statements made outside of the official proceedings.
Section 47 (c) of the Civil Code codifies the law of qualified privilege, which applies to statements in contexts such as the workplace, and bears quoting from, here:
(c) In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information. This subdivision applies to and includes a communication concerning the job performance or qualifications of an applicant for employment, based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, one whom the employer reasonably believes is a prospective employer of the applicant. This subdivision authorizes a current or former employer, or the employer’s agent, to answer whether or not the employer would rehire a current or former employee.
This qualified privilege typically applies in such employment areas as performance reviews and discipline, discussions of employee grievances, and statements made in response to requests made by third parties. Importantly, if it is proved that the complained of false statement was made intentionally, with malice, the privilege will not apply.
While the qualified privileges under the Civil Code are helpful in defending against workplace defamation claims, there is no better defense than “good facts” supported by “good evidence”. It is always better to avoid making false statements and unnecessary allegations of moral turpitude than to depend on proving that the false statements were made without malice.
It is better to prevent unnecessary publication of critical statements made in performance reviews than to depend on proving that they were true, or again, made without malice. To guard against claims of defamation, companies are well advised to implement and enforce sound employment-related policies and procedures which include documenting employee performance review and discipline, rather than depend on the undocumented memories of management and co-workers to rebut false accusations made in a defamation lawsuit. In our example exchange between Thomas and Andy, providing Thomas with adequate training to avoid making vague or unsubstantiated allegations could have prevented a lawsuit, saving the business thousands of dollars in litigation costs.
The key for small business owners to avoid defamation claims is to understand the law, and to design and implement appropriate policies and procedures. An experienced San Diego business lawyer can help. If your business is the subject of a lawsuit for defamation, it is imperative to retain an experienced civil litigation lawyer who can work to aggressively protect your interests and minimize monetary damages to your business. For more information browse our website or to discuss your businesses’ legal needs, contact the experienced and dedicated attorneys at Gehres Law Library for a free evaluation.
For additional resources relating to employment-related defamation claims, click here.