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Point Of Reference

Providing references for former employees could put your business at risk.

This story appears in the June 1997 issue of Entrepreneur. Subscribe »

An employee you fired has given your name as a reference for a new job. You'd like to save someone else from trouble by telling the prospective employer what you know. However, your lawyer has advised you not to give out references.

If you haven't listened to that advice before, you'd better start listening now. For the past decade, attorneys have advised employers not to provide references because a former employee might sue over defamation. In February, the U.S. Supreme Court issued a ruling that gives employers an even stronger reason to clam up. The ruling effectively extends the reach of federal anti-discrimination laws to former employees, who may now sue you over a bad reference by claiming your motive was retaliation.

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