William & Mary Law Review

Volume 30 | Issue 2 Article 18

Employer Defamation: The Role of Qualified

Privilege
Pamela G. Posey

Repository Citation
Pamela G. Posey, Employer Defamation: The Role of Qualified Privilege, 30 Wm. & Mary L. Rev. 469
(1989), http://scholarship.law.wm.edu/wmlr/vol30/iss2/18

Copyright c 1989 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository.
http://scholarship.law.wm.edu/wmlr
EMPLOYER DEFAMATION: THE ROLE OF QUALIFIED
PRIVILEGE

INTRODUCTION

"Jane Doe has applied for a position with our company and has
listed you as her most recent employer. We are calling to inquire
about her job performance and work history. Was she a satisfac-
tory employee? How would you rate her abilities? Would you hire
her again? Would you recommend her for this or other positions?
Why did she leave your employ?"
The questions are ones posed frequently to former employers by
prospective employers. Candid answers can help the prospective
employer evaluate the advisability of hiring a job applicant. The
answers can supplement information supplied on an application or
garnered from first impressions and allow the hiring party to com-
pare the day-to-day reality of a work relationship with the best-
foot-forward appearance of an interview situation.
The questions posed, however, are ones that former employers
are increasingly reluctant to answer. Comments and evaluations
can form the basis of liability for defamation, a cause of action
growing in popularity among employees who feel they were treated
unfairly, dismissed wrongfully or hampered in their job search by
unjustified appraisals.1 Some court-watchers estimate that em-
ployer defamation actions currently account for up to one-third of
all defamation verdicts.2

1. The popularity of defamation as a cause of action against employers is symptomatic of

the demise of the employment-at-will doctrine. See Prentice & Winslett, Employee Refer-
ences: Will a "No Comment" Policy Protect Employers Against Liability for Defamation?,
25 Am.Bus. L.J. 207, 208 & n.2 (1987).
2. Middleton, Employers Face Upsurge in Suits Over Defamation, Nat'l L.J., May 4,
1987, at 1, col. 3. See Martin & Bartol, Potential Libel and Slander Issues Involving Dis-
charged Employees, 13 EMPLOYEE REL. L.J. 43 (1987) for a lower estimate. The authors cite
authority that employer defamation claims comprise one-third of all defamation claims. Id.
at 43, 60 n.2.
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

Liability to current and former employees looms in every state-

ment, written or oral, concerning their performance. 3 Some em-
ployees retain their jobs, even get promotions, and still press their
actions for reputational damage." Some are dismissed and seek
compensation for lost wages when they are unable to secure other
employment.5
The employer's response to these hazards threatens to cut off
completely this important source of information for hiring deci-
sions. Anticipating uncooperative responses, many prospective
employers have discontinued the practice of checking an appli-
cant's work history and job experience. The result is blind hiring
with increased potential for fraud and misrepresentation by
applicants.
The increase in employer defamation actions is aggravated by
misunderstanding and misapplication of common law qualified

3. Comment, Potential Employer Liability for Employee References, 21 U. RICH. L. REv.

427, 434 (1987). A narrowing of qualified privilege increases the likelihood of liability for
almost every statement made in the employment context. Id. See also Middleton, supra
note 2, at 30, col. 1 (quoting Paul H. Tobias, founder of Plaintiff Employment Lawyers
Association: "'Spread the word. Every wrongful discharge must be looked at as a defama-
tion case,'" and Chicago lawyer Michael J. Leech: "'Every time you open your mouth or
write something down, you're opening yourself up to potential liability' ").
4. See Marchesi v. Franchino, 283 Md. 131, 387 A.2d 1129 (1978). Although she remained
at her job and received a promotion, the plaintiff, a probation officer for the Maryland De-
partment of Juvenile Services, successfully brought a defamation action against a fellow
employee. Accused by the fellow employee of homosexual advances, the plaintiff had been
the subject of an investigation by the employer, and a report to the state medical advisor
suggested that she receive a medical examination and possibly a psychiatric consultation. Id.
at 132-33, 387 A.2d at 1130.
5. See Frank B. Hall & Co. v. Beck, 678 S.W.2d 612 (Tex. Ct. App. 1984), cert. denied,
472 U.S. 1009 (1985); Stuempges v. Parke, Davis & Co., 297 N.W.2d 252 (Minn. 1980). In
Stuempges, an employment agency refused to find employment for the plaintiff after his
former employer gave "the worst recommendation" the placement office had ever received.
297 N.W.2d at 255.
6. Job references from former employers are a primary source of hiring information.
Ninety-five percent of employers check references supplied by a prospective employee. Mar-
tin & Bartol, supra note 2, at 43, 60 n.1. Offensive and defensive strategies explain the
practice. Eighty percent of all resumes contain misleading information about employment
histories. Prentice & Winslett, supra note 1, at 224 n.102. Management experts also agree
that the best predictor of future job performance is past job performance. Id. at 224.
7. A survey by a Chicago placement firm revealed that its employer/clients did not check
the references of nearly 75% of their job candidates. Middleton, supra note 2, at 30, col. 2.
1989] EMPLOYER DEFAMATION

privilege.8 Employers enjoy a qualified privilege when discussing

most matters related to employment with individuals having a cor-
responding interest or duty.' The privilege has the potential for
affording sweeping protection to employers. Courts, however, have
diluted the protection by using low-threshold standards to defeat
the privilege and to shift the burden of defense to employers. 10
This Note examines the development of the employer defama-
tion cause of action, reviewing the elements of common law defa-
mation and the historical background of qualified privilege. The
Note also describes the strained analysis courts have used to ex-
tend defamation to the employment context.
The courts' treatment of the "duty" and "interest" components
of qualified privilege in the employment context are analyzed
closely. The Note examines the situations in which courts have up-
held the privilege and the standards courts have used to defeat the
privilege. The results indicate widely divergent interpretations of
common law qualified privilege. At worst, the privilege extends
only to true statements1 or is defeated by mere negligence. 2 At
best, the privilege extends a protection to employers that is pierced
only by actual malice.' 3 The Note concludes with a call for rein-
forcement of the qualified privilege in the employment context as
the judicial solution for protecting the socially valuable informa-
tion embodied in job recommendations. Although the problem is
best resolved in the courts in which the difficulty has arisen, legis-

8. "[I]diosyncratic interpretation and application of the [qualified] privilege from state to

state can mean the difference between no liability and very substantial liability .... ." Cas-
tagnera-Cain, Defamation and Invasion of Privacy Actions in Typical Employee Relations
Situations, 13 LINCOLN L. REV. 1, 18 (1982).
1 9. RESTATEMENT (SECOND) OF TORTS § 595 (1977) (conditional privilege extends to infor-
mation given in response to a request, when a relationship exists between the parties and
the information affects a sufficiently important interest of the recipient or the recipient is
one to whom the publisher owes a duty; the privileg covers information concerning the
honesty and efficiency of an employee's work); 50 AM. Jun- 2D Libel and Slander § 275
(1970) (qualified privilege generally applies to communications about the character and
qualifications of an employee or former employee made to any person who has a legitimate
interest in the subject matter of the communication).
10. The courts have been narrowing the scope of employers' qualified privilege to com-
ment on employees, increasing the employer's risk of liability. Comment, supra note 3, at
432.
11. See Stuempges v. Parke, Davis & Co., 297 N.W.2d 252 (Minn. 1980).
12. See Schneider v. Pay'n Save Corp., 723 P.2d 619 (Alaska 1986).
13. See Marchesi v. Franchino, 283 Md. 131, 387 A.2d 1129 (1978).
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

lative alternatives may be appropriate if courts decline to take the

initiative.

DEFAMATION IN THE EMPLOYMENT CONTEXT

Although the tort of defamation varies slightly from jurisdiction

to jurisdiction, the basic elements consist of an unprivileged publi-
cation of false statements to third parties.14 The statements must
tend to harm the reputation of the person who is the subject of the
statements, lowering him in the estimation of the community."6
Defamation is actionable without proof of actual damages if the
statement tends to harm the individual in his business, trade, or
profession."
The common law established public policy exceptions to basic
defamation actions for areas in which the importance of the infor-
mation outweighed the risk of damaging an individual's reputa-
tion. 17 Without changing the actionable character of the words spo-
ken, the law extended a privilege to communicators of essential
information.18 By placating the fear of liability, the common law

14. RESTATEMENT (SECOND) OF TORTS § 558 (1977).

15. Id. § 559. The defamatory statement may also be one that tends to harm the reputa-
tion of another in such a way that it deters third parties from associating or dealing with
him. Id.
16. Id. § 573.
17. Qualified privilege is based on public policy. It arises out of the necessity of full and
unrestricted communication concerning the matter in which the parties have an interest or
duty. 50 AM. JUR. 2D Libel and Slander § 195 (1970). The extension of privilege involves
balancing the interest of a defamed person in protecting his reputation against the interests
of the publisher and the party receiving the information. RESTATEMENT (SECOND) OF TORTS §
595 comment b (1977). When qualified privilege applies, "public policy is deemed to favor
the free exchange of information order the individual's interest in his or her good reputa-
tion." Turner v. Halliburton Co., 240 Kan. 1, -, 722 P.2d 1106, 1112 (1986).
18. When the information was essential, the courts decided that the publisher of the in-
formation needed complete immunity from liability to encourage the most free exchange.
RESTATEMENT (SECOND) OF TORTS § 593 scope note (1977). An absolute privilege emerged for
government officials who serve in a legislative, executive, or judicial capacity "[t]o facilitate
the effective performance of government." Turner, 240 Kan. at -, 722 P.2d at 1112.
When the information was sufficiently important, the courts gave the communicator in-
creased incentive to furnish that information by relaxing the usual standard for liability.
RESTATEMENT (SECOND) OF TORTS § 595 comment b (1977). The resulting qualified privilege
burdens the defamation plaintiff with the additional proof of malice, a factor ordinarily
imputed to unprivileged communications. 50 AM. Jua. 2D Libel and Slander § 195 (1970).
1989] EMPLOYER DEFAMATION

encouraged a free exchange of the essential information. 9

In Marchesi v. Franchino,0 the Court of Appeals of Maryland
recognized that certain statements by employers "advance[d] so-
cial policies of greater importance than the vindication of a plain-
tiff's reputational interest" and that such statements fell within
the common law qualified privilege. 21 By doing so, the court al-
lowed the defendant employer to "escape liability for an otherwise
actionable defamatory statement. 2 2 The court reasoned, "Were it
not for this safeguard, 'information that should be given or re-
ceived would not be communicated because of [the] fear of ...
persons capable of giving it that they would be held liable in an
action of defamation if their statements were untrue.' ,23
In Rosenberg v. Mason, 4 the Virginia Supreme Court recognized
qualified privilege in the employment context, devising a three-
prong test to determine when the privilege would apply. To benefit
from the privilege, the defendant employer had to establish that
the occasion was privileged, that the words used did not transcend
the scope of the privilege, and that the words were used in good
faith, without actual malice.2 5 The "facts and circumstances lead-
ing up to and surrounding the use of the alleged defamatory
words" determine if the elements are established.2 6
Concurrent with the historical development of qualified privilege
for employers, defamation claimants have tested the judicial wa-

19. As a result of the privilege, the defendant "ought to be shielded against civil liability
for defamation where, in good faith, he publishes a statement in furtherance of his own
legitimate interests, or those shared in common with the recipient or third parties, or where
his declaration would be of interest to the public in general." Marchesi v. Franchino, 283
Md. 131, 135-36, 387 A.2d 1129, 1131 (1978).
20. 283 Md. 131, 387 A.2d 1129 (1978).
21. Id. at 135, 387 A.2d at 1131.
22. Id.
23. Id. (quoting RESTATEMENT (SECOND) OF TORTS § 593 scope note (1977)).
24. 157 Va. 215, 160 S.E. 190 (1931). In Rosenberg, a retail store manager fired an em-
ployee of the store, believing she was responsible for shortages in receipts. The employee
brought a defamation action when a clothing store denied her employment after talking
with her former boss. The court found for the employer on the basis of qualified privilege
because the employee did not affirmatively prove an abuse of the privilege.
25. Id. at 234, 160 S.E. at 197.
26. Id. (particularly any words tending to show that the defendant believed the words to
be true when he used them).
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

ters in several employment contexts: evaluations, discharge, and

job references. They have met with varying degrees of success.

Evaluations
In Caslin v. General Electric Co., 2 7 an employee attempted to
press a defamation action for allegedly libelous comments con-
tained in his written performance evaluations. The circumstances,
however, did not support a defamation claim. The employee "had
been fully aware for years that he would periodically be rated as to
efficiency and in spite of not obtaining the status he thought he
deserved these reports are communications within the employing
company which are necessary to its functioning and, therefore, do
not incur a liability" to the employer.2 8
In Bratt v. InternationalBusiness Machines Corp.,29 a similar
attempt also failed. The employee premised his defamation claim
on a memorandum circulated among his supervisors that indicated
he had a mental disorder.3 0 The Supreme Judicial Court of Massa-
chusetts quoted with approval authority from other jurisdictions:
"'[e]mployers... have a legitimate need.., to determine whether
or not their employees are professionally, physically, and psycho-
logically capable of performing their duties.' ,2 Accordingly, the
court found that good faith disclosures by employers of defamatory

27. 608 S.W.2d 69 (Ky. Ct. App. 1980). The employee had been an in-house attorney for
General Electric for 24 years. In 1974 and 1977, his supervisor rated him "'below average'
and "'not promotable,'" a rating of four on a scale of nine. Id. at 70. The employer did not
discharge the employee because of the efficiency reports. Instead, the employee elected to
resign before he filed the lawsuit. Id. at 71. Although the court addressed the viability of a
defamation action based on the reports contained in his file, it did not decide the case on
the facts. The court entered a summary judgment for the employer because the statute of
limitations had run on the action. Id. at 70.
28. Id. The court dealt with the allegedly defamatory statements in the context of a qual-
ified privilege. In assessing the utility of the evaluations, the court also noted that the re-
ports "not only point out his shortcomings but are also complimentary to him in many areas
covered." Id. at 71.
29. 392 Mass. 508, 467 N.E.2d 126 (1984). In Bratt, the trial court had granted defendant
employer's motion for summary judgment. With the appeal pending before the United
States Court of Appeals for the First Circuit, the Massachusetts Supreme Judicial Court
answered certified questions of law referred by the federal judge. Its responses supported
the employer's qualified privilege in each instance. Id.
30. Id. at 512, 467 N.E.2d at 130.
31. Id. at 516, 467 N.E.2d at 133 (quoting Hoesl v. United States, 451 F. Supp. 1170, 1176
(N.D. Cal. 1978), aff'd, 629 F.2d 586 (9th Cir. 1980)).
1989] EMPLOYER DEFAMATION 475

medical information relevant to employees' fitness to work were

32
conditionally privileged.

Discharge
Defamation also has developed as a back door approach in states
that do not recognize a wrongful discharge tort.3 3 In Loughry v.
Lincoln First Bank, N.A., 4 a bank employee prevailed in a defa-
mation action for statements made at a meeting the day before his
discharge. The bank produced evidence purporting to implicate
him for drug use, theft, and general misconduct; a senior vice pres-
ident of the bank justified his termination on grounds that "the
bank had lost confidence in him."35 The court held that
"[s]tatements among employees in furtherance of the common in-
terest of the employer, made at a confidential meeting, may well
fall within the ambit of a qualified .. privilege. But the privilege
is conditioned on its proper exercise.... 1136
In Kroger Co. v. Young, 37 the Virginia Supreme Court consid-
ered a claim based on an employer's explanation of an employee's
termination. The store manager offered full-time work to a part-
time cashier "'because they had to get rid of two of the girls over
there for taking money.' "8 The court found that the manager's
39
statement was within his duty and legitimate business interest.

32. Id.
33. See Blodgett, New Twist to Defamation Suits, A.Bk J., May 1, 1987, at 17 (predict-
ing that courts will substitute defamation by self-publication and defamation to third par-
ties in states that bar the wrongful discharge action, especially when employers' insurance
policies generally cover defamation verdicts). See also Martin & Bartol, supra note 2;
Striharchuk, FiredEmployees Turn Reason for Dismissal into a Legal Weapon, Wall St. J.,
Oct. 2, 1986, at 29, col. 2.
34. 67 N.Y.2d 369, 494 N.E.2d 70, 502 N.Y.S.2d 965 (1986).
35. Id. at 374, 494 N.E.2d at 72, 502 N.Y.S.2d at 967.
36. Id. at 376, 494 N.E.2d at 73, 502 N.Y.S.2d at 968 (citations omitted). In Loughry, the
plaintiff prevailed on a showing that managers made the statements solely out of malice. Id.
37. 210 Va. 564, 172 S.E.2d 720 (1970). In Kroger, the employer confronted an employee
with evidence that she had stolen money from the cash register. After confessing to the
theft, the employee implicated the plaintiff, stating that the plaintiff taught her how to
remove the money without being detected. Id. at 565, 172 S.E.2d at 721. The supreme court
reversed the trial court, which had erroneously ruled that statements by the employer ex-
plaining the plaintiff's discharge were not qualifiedly privileged. Id. at 567, 172 S.E.2d at
722.
38. Id. at 566, 172 S.E.2d at 722.
39. Id. at 567-68, 172 S.E.2d at 723.
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

Job References
The most prevalent type of employment defamation action, how-
ever, is based on statements made by the former employer to a
prospective employer who is checking references or confirming an
applicant's work history. Obviously, an employer's unfavorable re-
sponse to an inquiry may impair the employee's chances of secur-
ing subsequent employment.40 The success of this type of action
can be traced to an increasing recognition that an employer cannot
deprive one of the quasi-property interest in one's job without
some minimal due process.4 '
Defamation cases involving job references abound. Circum-
stances vary from unsolicited letters to potential employers charac-
terizing the employee's voluntary departure as a termination 42 to
an unsubstantiated diatribe maligning the employee's work habits
and sales record.43
Because job references implicate most directly the employee's
professional reputation in the business community and, simultane-
ously, the public interest in the free exchange of the information
sought, they create the greatest difficulties for the courts and, con-
sequently, for employers as well.
In Stuempges v. Parke, Davis & Co., 44 the Supreme Court of
Minnesota wrestled with these countervailing interests. On the one
hand, the court remarked, "[i]t is certainly in the public interest
that this kind of information be readily available to prospective
employers .... [U]nless a significant privilege is recognized .

40. Comment, supra note 3, at 429.

41. Castagnera-Cain, supra note 8, at 4.
42. Davis v. Ross, 754 F.2d 80 (2d Cir. 1985). Singer Diana Ross disseminated a note
listing the names of seven former employees, including the plaintiff, whom she no longer
employed. The note continued: "If I let an employee go, it's because either their work or
their personal habits are not acceptable to me. I do not recommend these people. In fact, if
you hear from these people, and they use my name as a reference, I wish to be contacted."
Id. at 81-82. The plaintiff claimed that she resigned voluntarily and never used Ross as a
reference. Regardless, the note hampered her efforts to secure subsequent employment. The
court of appeals reversed the trial court, which had dismissed the complaint as nonlibelous
as a matter of law. The appellate court ruled the letter was "reasonably susceptible of sev-
eral interpretations, at least one of which is potentially libelous." It therefore presented a
question for the jury. Id. at 86.
43. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252 (Minn. 1980). See supra note 5
(disctission of Stuempges).
44. 297 N.W.2d 252 (Minn. 1980).
19891 EMPLOYER DEFAMATION

employers will decline to evaluate honestly their former employees'

work records."'4 5 On the other hand, the court noted the impor-
tance of "protect[ing] the job seeker from malicious undercutting
by a former employer."4' 6
Regardless of the circumstances under which a defamation claim
arises in the workplace, employment defamation presents special
problems that complicate consistent judicial resolution.

PROBLEMS WITH DEFAMATION IN THE EMPLOYMENT CONTEXT

In the employment context, courts have been willing to stretch

legal analysis in three general ways to extend generous protection
to the employee's reputational interest. First, courts have treated
employers' statements as fact, rather than opinion, which would
not implicate defamation.4 7 Second, courts have found defamation
when the employee himself made 48 or authorized 4 9 the only publi-
cation of the allegedly damaging statements. Finally, some courts'
multifarious interpretations and application of qualified privilege
have woven a tangled web of liability from which employers are
unable to extricate themselves.5 0

Job References: Fact or Opinion

Courts have recognized employer's impressions and evaluations
as fact, rather than opinion. The distinction is critical in light of
dicta in Gertz v. Robert Welch, Inc.5 1 The United States Supreme

45. Id. at 257.

46. Id. at 258.
47. See Note, The Fact-OpinionDistinction in First Amendment Libel Law: The Need
for a Bright-Line Rule, 72 GEo. L.J. 1817 (1984).
48. See cases cited infra note 67.
49. See Frank B. Hall & Co. v. Buck, 678 S.W.2d 612 (Tex. Ct. App. 1984), cert. denied,
472 U.S. 1009 (1985). In Buck, the employer, an insurance company, discharged the plain-
tiff, a salesman, only months after luring him away from a competing firm. The employer
explained that the plaintiff failed to meet its expectations. The employee, unable to secure
subsequent employment, hired a private investigator to discover the true reasons for his
termination. He brought a defamation action based on statements made by the former em-
ployer to the private investigator. Id. at 616-17. The appellate court affirmed a $1.9 million
jury verdict for the plaintiff. Id. at 619.
50. Castagnera-Cain, supra note 8, at 18-19.
51. 418 U.S. 323 (1974). In Gertz, the United States Supreme Court declined to extend
the New York Times v.Sullivan actual malice standard to defamation of a private citizen
by the media. The private individual is more vulnerable to injury and more deserving of
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

Court indicated that, under the first amendment, "there is no such

thing as a false idea."' 52 The Court suggested a constitutional basis
for providing absolute immunity from liability for defamation ac-
tions based on pure opinion. 3
This understanding mirrors the common law "fair comment doc-
trine" that provides immunity from defamation for opinions on
matters of public interest. 4 To fall within the purview of the doc-
trine, the opinions stated must not relate to the person who is the
subject of the statements but rather to his acts. The statements
also must be an honest and fair expression of opinion based on
facts truly stated. 5
The question of whether specific statements are fact or opinion
is a matter of law to be determined by the court.5 Most courts
have not given serious consideration to the distinction. 5 At the

recovery because he does not have the same opportunity for self-help as the public figure or
public official. He does not have the same access to channels of effective communication to
correct the error. He has not invited attention and comment by thrusting himself into pub-
lic affairs, thereby voluntarily risking an increased chance of injury. Given these concerns,
the plurality opinion left the individual states to define the appropriate fault-based stan-
dard for defamation liability by balancing first amendment concerns against the legitimate
state interest of redressing reputational harm. Id. at 344-46.
52. Id. at 339.
53. Id. at 340 n.8.
54. 50 AM. JUR. 2D Libel and Slander § 289 (1970). To be covered by the fair comment
doctrine, the statement must be an opinion, in whole or in part, and not an assertion of a
factual proposition. The statement must relate to a matter of public interest or concern. Id.
Although the courts have applied the doctrine most frequently to the media, it is available
to the general public as well. Id. § 290. See Olman v. Evans, 750 F.2d 970 (D.C. Cir. 1984)
(en banc), cert. denied, 471 U.S. 1127 (1985) (applying the fair comment doctrine in the
context of a published newspaper column criticizing the political and philosophical bent of a
university professor).
55. 50 AM. JUR. 2D Libel and Slander § 290 (1970). A derogatory inference may become a
statement of fact, rather than a fair comment, if it states a conclusion without specifying the
facts from which the inference is derived. Id. § 289. When stated with the relevant facts, a
fair comment gives the recipient the opportunity to examine the basis for the opinion and
arrive at a different conclusion based on the same information. The Restatement position
also places an opinion outside the purview of the fair comment doctrine if the opinion sug-
gests undisclosed defamatory facts as its basis. Note, supra note 47, at 1827; see RESTATE-
MENT (SECOND) OF TORTS § 606 (1977).
56. Olman, 750 F.2d at 978.
57. Indeed, because most cases do not address the distinction between fact and opinion in
employment defamation, one can only assume that the courts have adopted a per se rule of
treating employers' statements as fact.
1989] - EMPLOYER DEFAMATION 479

very least, they have not articulated any specific analysis to deter-
mine whether an employer's impressions are subjective opinion. 8
The Circuit Court of Appeals for the District of Columbia, how-
ever, has extrapolated from Supreme Court cases a four-factor
standard for distinguishing fact from opinion. The test focuses on
context of the statement, social context, common meaning, and
verifiability by objective proof."
The immediate context of a statement influences the audience's
readiness to infer that the comment has factual content. 1 Certain
contexts, including job recommendations, may imply the existence
of facts not disclosed by the speaker. Again, drawing a parallel to
the fair comment doctrine, the speaker would bear the ultimate
burden of establishing that his opinion was indeed based on facts,
even though reasonable individuals could form differing opinions
using the same raw data.
The broader social context or setting in which the statement is
made also may signal the audience whether the statement is likely
to be fact or opinion.62 In the employment context, the prospective
employer solicits an opinion-an overall perception of an individ-
ual as a person and an employee. He may reasonably expect some
factual basis for the appraisal, but human experience suggests that
people do not make uniform impressions on all of those with whom
they come into contact.
The common meaning of the specific language used in a recom-
mendation is also a valuable indicator in determining whether the
statement is opinion. The former employer's comments may have a

58. See Note, supra note 47, at 1819. When judicial tests are applied, they tend to be
vague and unpredictable. The vagueness limits their usefulness and raises the problem of
self-censorship. Id. The article argues for a "bright line rule" to protect the media and end
the question of how the courts will construe opinion statements made by the press. Id. at
1846. The same reasoning, however, applies in the employment context. If employers are
unsure of when their conduct will cross into some unprotected realm, the predictable reac-
tion will be a reluctance to make any statement.
59. In Olman, a professor of political science brought suit against two nationally syndi-
cated columnists for an allegedly defamatory article. 750 F.2d at 979.
60. Id. The court called for predictability and the use of an announced legal standard. It
rejected approaches of other jurisdictions in which courts used no standard, but treated the
distinction as a judgment call; used verifiability as a single-factor test; or used the multi-
factor test of totality of circumstances. Id. at 978. See also Note, supra note 47, at 1846.
61. Olman, 750 F.2d at 979.
62. Id.
480 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

precise core meaning or may be fairly ambiguous. The more indefi-

nite the comments, the less likely they are to infer facts. 3
Finally, the statement's susceptibility to objective proof is a key
factor in the distinction between fact and opinion. If the statement
is not easily verifiable, the prospective employer is less likely to
accept it as a fact. 4
Use of the Oilman test in employment defamation cases would
identify statements so factually ladened that they are not entitled
to benefit from opinion privilege.6 5 The test also supplies a bright
line rule by which employers could measure their statement and
avoid excessive self-censorship.6

Self-Publication: Supplying the Missing Element

A second analytical leap has encouraged the proliferation of em-

ployer defamation suits. Some courts have been willing to allow
defamation actions to proceed without actual publication of the
statements by the employer to any third party.6 7 The employee

63. Id. at 980. Conversely, the more precise the statements, the more likely they are to
give rise to clear factual implications. The relevant question is whether the statement has a
meaning definite enough to convey facts. Id.
64. Id. at 981. The court recognizes that objective verifiability is a difficult line to draw.
However, "[tirial judges . . . will be particularly well situated to determine what can be
proven." Id. at 982.
65. Id. at 985.
66. See Note, supra note 47, at 1818. But cf. Note, The Fact-OpinionDetermination in
Defamation, 88 COLUM. L. REV. 809 (1988) (which proposes to replace the Oilman four-
prong test with a requirement of an explicit and specific defamatory charge to support a
defamation action; broad, unfocused, subjective allegations would be insufficient, regardless
of defamatory implications and innuendo).
67. Blodgett, supra note 33, at 17. The theory of compelled self-publication has prevailed
in California (McKinney v. County of Santa Clara, 110 Cal. App. 3d 787, 168 Cal. Rptr. 89
(1980)), Georgia (Colonial Stores, Inc. v. Barrett, 73 Ga. App. 839, 38 S.E.2d 306 (1946)),
Iowa (Belcher v. Little, 315 N.W.2d 734 (Iowa 1982)), Michigan (Grist v. Upjohn Co., 16
Mich. App. 452, 168 N.W.2d 389 (1969)), Minnesota (Lewis v. Equitable Life Assurance
Soc'y, 361 N.W.2d 875 (Minn. Ct. App. 1985), rev'd in part, 389 N.W.2d 876 (Minn. 1986)).
The courts found that the employees involved had no choice but to disclose the facts of
their previous termination; the prospective employers inquired about previous employment
before they would consider the employees for a job. Misrepresentation was not an option
because the prospective employers intended to check the stories with former employers.
Further, the courts wanted to encourage a truthful response. The former employers were
therefore exposed to liability even if their actual response to inquiries was a neutral one.
Blodgett, supra note 33, at 17. Contra Churchey v. Adolph Coors Co., 725 P.2d 38 (Colo. Ct.
1989] EMPLOYER DEFAMATION 481

himself satisfies the publication element of defamation by dissemi-

nating thQ employer's allegedly defamatory statement.
Using the legal fiction of compelled self-publication,6 8 courts
have reasoned that the employees had no alternative but to dis-
close statements of previous employers to prospective employers.6 9
To expect otherwise would condone falsehoods and fabrication by
job applicants."0 Under this analysis, the former employer is held
responsible for publication of his statements if he could have rea-
sonably foreseen circumstances in which the employee would be
morally obliged to divulge the communication.7 1
In Lewis v. Equitable Life Assurance Society,72 the Court of Ap-
peals of Minnesota recognized that "[o]rdinarily the defendant is

App. 1986) (in which the court found no reason to weaken the general rule with an excep-
tion for self-publication).
68. See Blodgett, supra note 33, at 17.
69. See cases cited supra note 67; Middleton, supra note 2, at 30, col. 3; Blodgett, supra
note 33, at 17. In McKinney v. County of Santa Clara, the California Court of Appeals
determined that the inquiry was a reasonable one for a prospective employer to make of a
job applicant. Information about previous employment is "required of him as a practical
matter." 110 Cal. App. 3d 787, 793, 168 Cal. Rptr. 89, 91 (1980).
70. Middleton, supra note 2, at 30, col. 4; see also Lewis v. Equitable Life Assurance
Soc'y, 389 N.W.2d 876, 888 (Minn. 1986) ("[flabrication . . . is an unacceptable
alternative").
71. Middleton, supra note 2, at 30, col. 4 (quoting Lewis v. Equitable Life Assurance
Soc'y, 389 N.W.2d 876, 888 (Minn. 1986): "'The concept of compelled self-publication does
no more than hold the originator.., liable.., where [he] knows, or should know, of circum-
stances whereby the defamed person has no reasonable means of avoiding publication of the
statement or avoiding the resulting damages' "). See also McKinney v. County of Santa
Clara, 110 Cal. App. 3d 787, 168 Cal. Rptr. 89 (1980) (applicant was compelled to tell police
departments to which he applied that his departure from his previous job was involuntary;
he had a foreseeable strong compulsion to republish the former employer's statements, and
the originator knew of those circumstances at the time he made the statements); Colonial
Stores, Inc. v. Barrett, 73 Ga. App. 839, 38 S.E.2d 306 (1946) (the employee was required by
law to present a certificate of separation and statement of availability from the former em-
ployer to be eligible for a new employment referral; the certificate contained prejudicial
information stating that he was discharged for improper conduct toward a fellow employee);
Grist v. Upjohn Co., 16 Mich. App. 452, 168 N.W.2d 389 (1969) (finding a publication
"where the conditions are such that the utterer of the defamatory matter intends or has
reason to suppose that in the ordinary course of events the matter will come to the knowl-
edge of some third person").
72. 361 N.W.2d 875 (Minn. Ct. App. 1985), rev'd in part, afl'd in part, 389 N.W.2d 876
(Minn. 1986) (affirming the decision but reducing the award by eliminating punitive dam-
ages). The employer terminated the plaintiffs for gross insubordination when the plaintiffs
refused to reconstruct their expense report to reflect lower totals than the actual amount
they incurred. In interviewing for other positions, they admitted they were terminated for
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

not liable for any publication made to others by the plaintiff him-
self, even though it was to be expected that he might publish it."1 73

The court reasoned that a departure from the general rule is war-
ranted, however, "[wihen an injured party operates under a strong
compulsion to republish, and that compelled repetition is reasona-
bly foreseeable. '7 4 The court found that the employer's refusal to
explain the employees' discharge to prospective employers forced
them to explain the circumstances themselves. 75 The employees
were fired for "gross insubordination" when they refused to falsify
expense account records to claim a lower total amount. 6
Considering the case on appeal, the Supreme Court of Minne-
sota recognized the implications of the decision and the significant
impact on employers. The court, however, minimized the import of
accepting compelled self-publication by concluding, "[W]hen prop-
erly applied, it need not substantially broaden the scope of liability
for defamation. ' 77 Under the court's instructions, the greatest im-
pact would be felt by employers whose communications demon-
strate dishonesty and malice.7 8 The dissenting justice noted that,
as a result of the decision, the employer's only avenue to avoid
litigation is "to cease communicating the reason it felt justified the

gross insubordination. The jury awarded them $1.25 million in damages, which later was
reduced. Id. at 878-79.
73. Id. at 880 (quoting W. PROSSER & R. KEETON, LAW OF TORTS § 113 (5th ed. 1984)).
74. Id. at 881 (relying on the "strong causal link" between making a statement and com-
pelled repetition identified in McKinney v. County of Santa Clara, 110 Cal. App. 3d 787, 168
Cal. Rptr. 89 (1980)).
75. 361 N.W.2d at 881. The cases, however, do not turn on the employer's refusal to give
a reference or respond to an inquiry. Even with a neutral response to an inquiry, the em-
ployer can be liable when the ex-employee applies for a new job and has to reveal the reason
for his or her dismissal. See Blodgett, supra note 33, at 17.
76. 361 N.W.2d at 878-79. The court determined that unless the employees decided to lie,
they were compelled to communicate the grounds given them. "[D]efamation is not erased
by opportunities for explaining or refuting it." Id. at 881.
77. Lewis v. Equitable Life Assurance Soc'y, 389 N.W.2d at 888.
78. Although the court was willing to recognize self-publication, it noted the need for
simultaneous recognition of "a significant privilege" to protect the public interest in the
availability of such information. Id. at 890. It favored a common law malice standard for
defeating the privilege, making employers liable only if they made the statements "from ill
will and improper motives, or causelessly and wantonly for the purpose of injuring the
plaintiff" employee. Id. at 891.
1989] EMPLOYER DEFAMATION

termination, not only to third persons, but even to the employee

'79
himself or herself.
The discharged employee can meet the self-publication test eas-
ily. He likely will seek other employment. A prospective employer
predictably will ask about his employment history. The result is an
open invitation for the discharged employee to create his own
wrong, implicate the defendant of his choice, aggravate rather than
mitigate damages, and collect for the self-inflicted injury.80

Qualified Privilege: The Confused Privilege

In an employment-related defamation claim, the employer's lia-

bility may turn on his ability to establish that he made the state-
ments on an appropriate occasion without abusing his privilege."1
The difficulty arises in determining from case law the scope of an
employer's qualified privilege. Courts differ widely on what parties
82
share the requisite interests and duties to invoke the privilege
and on what is required of the plaintiff to defeat the privilege.

79. Id. at 896 (Kelly, J., dissenting)). "Not surprisingly, defense lawyers are telling em-
ployers to do just that-or to frame any reason for termination given to the employee in
non-defamatory terms." Middleton, supra note 2, at 30, col. 4.
80. See Prentice & Winslett, supra note 1, at 213, 228-38 (which attempts to discredit the
arguments against self-publication). A similarly questionable result occurs when the em-
ployee can maintain a defamation action based on the employer's statements to the em-
ployee's agent. In one case, the discharged employee hired a private investigator to discover
the true reason for his termination. Frank B. Hall & Co. v. Buck, 678 S.W.2d 612, 617 (Tex.
Ct. App. 1984), cert denied, 472 U.S. 1009 (1985). The investigator contacted the employer,
identified himself as an investigator checking the former employee's background, and in-
quired about his work history. The employer responded with an unflattering evaluation. Id.
at 617. The court rejected the employer's argument that the employee had authorized, in-
vited, or procured the defamation, reasoning that the employee did not know in advance
that the employer's response would be defamatory. Id. He did know, however, that the em-
ployer discharged him for unsatisfactory performance. Again, the court allowed the plaintiff
to orchestrate the employer's liability, creating his own wrong and collecting for it.
81. See Rosenberg v. Mason, 157 Va. 215, 234, 160 S.E. 190, 197 (1931) (an available
defense is the assertion that the statement was spoken on a privileged occasion and the
privilege of the occasion was not abused).
82. See RESTATEMENT (SECOND) OF TORTS §§ 595, 596 (1977) (the privilege may arise from
common interest between the parties or a legal, moral, or social duty of the publisher to the
recipient); see also Marchesi v. Franchino, 283 Md. 131, 135-36, 387 A.2d 1129, 1131 (1978)
(employer may rely on qualified privilege when publishing statements to further his own
interests or those shared in common with the recipient or third parties).
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

The Scope

Courts have extended a qualified privilege to various relation-

ships within the employment context. 8 They have acknowledged
that the efficient transaction of business requires a degree of free-
dom to speak candidly without undue concern over liability. "
Courts also have recognized that an employer has a duty to dis-
close to the affected employee the basis for evaluations of his work
made during his employment 5 and the reasons for his dismissal.8 6
In Caslin v. General Electric Co.,81 the Kentucky Court of Appeals
stated that employee evaluations were "necessary to [the] func-
tioning" of the employing company and benefitted the employee
by pointing out his shortcomings and complimenting his
strengths. 8
The employer has no corresponding duty, however, to volunteer
information about an undesirable employee to third parties with
whom the employee might seek employment. In Davis v. Ross,"9
the United States Court of Appeals for the Second Circuit deter-
mined that singer Diana Ross did not enjoy a qualified privilege
when she distributed an unsolicited letter impugning the qualifica-
tions of a former employee. Ross had no reason to conclude that

83. See generally 50 AM. JUR. 2D Libel and Slander § 275 (1970) (extending the privilege
in the employment context to any person who has a duty to speak and has a legitimate
interest in the subject matter when the topic is the character and qualifications of an em-
ployee or former employee); Duffy, Defamation and Employer Privilege, 9 EMPLOYEE REL.
L.J. 444 (1984) (examining the relationships to which the privilege applies in the employ-
ment context); Annotation, Libel and Slander: Privileged Nature of Communication to
Other Employees or Employees' Union of Reasons for Plaintiff's Discharge, 60 A.L.R. 3D
1080 (1974).
84. Marchesi, 283 Md. at 1335-36, 387 A.2d at 1131 (considering the advancement of so-
cial policies of greater importance than vindication of an individual's reputational interest).
85. Caslin v. General Elec. Co., 608 S.W.2d 69 (Ky. Ct. App. 1980).
86. Lewis v. Equitable Life Assurance Soc'y, 361 N.W.2d 875, 880 (Minn. Ct. App. 1985),
rev'd in part, aff'd in part, 389 N.W.2d 876 (Minn. 1986) (when made in good faith, an
employer has the privilege to describe the discharge of an employee).
87. 608 S.W.2d 69 (Ky. Ct. App. 1980).
88. Id. at 70.
89. 754 F.2d 80 (2d Cir. 1985); see also RESTATEMENT (SECOND) OF TORTS § 595 (2)(a)
(1977) (consider whether publication is in response to a request, rather than voluntary, in
determining if publication to protect the interest of a third party is within generally ac-
cepted standards for decent conduct).
1989] EMPLOYER DEFAMATION 485

"the recipients of the letter would be interested in whether [she

was] . . . personally satisf[ied]. '"9'
The courts are split on whether an employer shares an interest
with its employees that can serve as the basis for a qualified privi-
lege to disseminate information about co-workers or subordinates.
On the one hand, the employer may be able to protect his business
interests by alerting co-workers to suspected dishonesty or miscon-
duct in their ranks.9 1 More than fifty years ago, the Virginia Su-
preme Court decided the issue, holding that an employer was pro-
tecting his own business interest by communicating with his
employees about the discharge of two fellow employees for theft.2
His statements were reasonable to "impress upon [them] the ne-
cessity for [their] own meticulous handling of company funds."9 "
On the other hand, employers need not inform nonsupervisory
co-workers of circumstances surrounding the dismissal of their col-
leagues. In Sias v. General Motors Corp.,94 the Michigan Supreme
Court declined to extend the privilege beyond supervisory ranks.
The employer disseminated information to employees that the
wrongdoer in their midst had been detected and dismissed. His in-
terest in boosting their morale and their interest in being free from
suspicion did not rise to the level of a privileged communication. 5
Managers present a different problem. Qualified privilege may
extend to supervisory personnel by virtue of their interest in busi-
ness matters concerning their subordinates.9 ' Managers may be

90. Id. at 84.

91. See Kroger Co. v. Young, 210 Va. 564, 172 S.E.2d 720 (1970); cf. Jones v. J.C. Penney,
164 Ga. App. 432, 297 S.E.2d 339 (1982) (employer told co-employee of the plaintiff's dis-
missal for wrongdoing because the co-employee was a close personal friend of the former
employee and he requested the information).
92. Kroger, 210 Va. at 568, 172 S.E.2d at 723.
93. Id.
94. 372 Mich. 542, 127 N.W.2d 357 (1964).
95. Id. at 546-48, 127 N.W.2d at 360. Contra Jones, 164 Ga. App. 432, 297 S.E.2d 339
(1982).
96. See Turner v. Halliburton Co., 240 Kan. 1, -, 722 P.2d 1106, 1114 (1986) (noting that
all of the employees to whom the information was communicated were managerial level em-
ployees with an interest in the situation); see also Schneider v. Pay'n Save Corp., 723 P.2d
619, 624 (Alaska 1986) (loss prevention manager's statements to the employer regarding
employee's failure to ring up certain sales was conditionally privileged because the employer
had a legitimate interest in protecting its business from theft and the manager had a duty to
report to the employer instances of shortfall and employee misconduct).
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

identified so. closely with the employer that the court may view
them as one and the same. Internal discussions among supervisors
may not constitute publication. The theory, based on agency law,
asserts that intraoffice communication between supervisory em-
ployees of a corporation about the work of another employee of the
corporation "is simply the corporation talking to itself and not
publication."98
The courts have less difficulty acknowledging a shared interest
between former and prospective employers for information con-
cerning job applicants. 9 In Stuempges v. Parke, Davis & Co.,100
the Minnesota Supreme Court affirmed the existence of a qualified
privilege covering an employer's statements about a former em-
ployee's qualifications. The privilege prevails if the statements are
made in good faith to a party with a legitimate interest in the sub-
ject matter. "It is certainly in the public interest that this kind of

97. For a discussion of the division of authority on this theory, see Luttrell v. United Tel.
Sys. Inc., 9 Kan. App. 2d 620,--, 683 P.2d 1292, 1293-94 (1984), aff'd, 236 Kan. 710, 695
P.2d 1279 (1985). In Luttrell, the Kansas Supreme Court determined that the theory con-
fused publication with privilege and affirmed the appellate court ruling that the existing
qualified privilege was sufficient protection for the employer. For an argument that courts
finding no publication in these circumstances actually confuse publication with qualified
privilege, see Note, Libel and Slander - IntracorporateCommunication as Publication to
Third Parties,33 U. KAN. L. REv. 759 (1985).
98. Luttrell, 9 Kan. App. 2d at -, 683 P.2d at 1293. The theory, which presented an issue
of first impression in Luttrell, was accepted in other cases. E.g., Halsell v. Kimberly-Clark
Corp., 683 F.2d 285 (8th Cir. 1982), cert. denied, 459 U.S. 1205 (1983); Monahan v. Sims,
163 Ga. App. 354, 294 S.E.2d 548 (1982); Commercial Union Ins. Co. v. Melikyan, 424 So. 2d
1114 (La. Ct. App. 1982); Ellis v. Jewish Hosp., 581 S.W.2d 850 (Mo. Ct. App. 1979); Jones
v. Golden Spike Corp., 97 Nev. 24, 623 P.2d 970 (1981). It was rejected in Brewer v. Ameri-
can Nat'l Ins. Co., 636 F.2d 150 (6th Cir. 1980); Arsenault v. Allegheny Airlines, 485 F.
Supp. 1373 (D. Mass.), aff'd, 636 F.2d 1199 (1st Cir. 1980), cert. denied, 454 U.S. 821 (1981);
Pirre v. Printing Devs., Inc., 468 F. Supp. 1028 (S.D.N.Y.), aff'd, 614 F.2d 1290 (2d Cir.
1979); and Kelly v. General Tel. Co., 136 Cal. App. 3d 278, 186 Cal. Rptr. 184 (1982).
99. In the context of employment recommendations, the courts generally recognize a
qualified privilege between former and prospective employers as long as the statements are
made in good faith and for a legitimate purpose. Stuempges v. Parke, Davis & Co., 297
N.W.2d 252, 257 (Minn. 1980); see, e.g., Holdaway Drugs, Inc. v. Braden, 582 S.W.2d 646
(Ky. 1979); Wynn v. Cole, 68 Mich. App. 706, 243 N.W.2d 923 (1976); Calero v. Del Chem.
Corp., 68 Wis. 2d 487, 228 N.W.2d 737 (1975); see also RESTATEMENT (SECOND) OF TORTS §
595 comment i (1977) (a former employer has a qualified privilege to make defamatory com-
munications about the character and conduct of a former employee to present and prospec-
tive employers if the communications are made for the purpose of enabling the recipient to
protect his own interest and are reasonably calculated to do so).
100. 297 N.W.2d 252 (Minn. 1980).
19891 EMPLOYER DEFAMATION

information be readily available to prospective employers . ... "-"o

The difficulty comes in valuing the information and extending the
privilege.

The Standard
Once the privilege is established, a plaintiff may still prevail by
showing abuse of the privilege by excessive publication (to too
many people), excessive language (too much information), 0 2 or
malicious motivation for the statements. 0 3
Any lesser construction would render the qualified privilege a
nullity. Truth, nondefamatory construction, or absence of ill will
would defeat a defamation claim in situations that are not privi-
leged. Truth is an absolute defense to a defamation claim.104 Am-
biguous meaning could foreclose the element of reputational
harm. 0 5 Absence of any ill will could suggest mere mistake.
The employer's qualified privilege has been defeated by simple

101. Id. at 257. The court found, however, that a demonstration of malice defeated the
privilege. Id. at 258.
102. Duffy, supra note 83, at 448.
103. W. PROSSER & R. KEETON, LAW OF TORTS § 115 (5th ed. 1984). "[P]rivilege is for-
feited if the publication is 'mialicious.' It is clear that this means something more than the
fictitious 'legal malice' which is 'implied' as a disguise for strict liability in any case of un-
privileged defamation." Id. See RESTATEMENT (SECOND) OF TORTS § 595 comment b (1977)
(after Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974) (plurality opinion), fault amounting
to negligence is required of all defendants; thus mere negligence is no longer sufficient to
constitute an abuse of qualified privilege); see also Duffy, supra note 83, at 447; Comment,
supra note 3, at 431; Annotation, Defamation: Loss of Employer's Qualified Privilege to
Publish Employee's Work Record or Qualifications, 24 A.L.R. 4TH 144 (1983).
104. See RESTATEMENT (SEcOND) OF TORTS § 558 (1977) (defamatory statements must be
false); see also Luttrell v. United Tel. Sys., Inc., 9 Kan. App. 2d 620, -. 683 P.2d 1292, 1293
(1984), aff'd, 236 Kan. 710, 695 P.2d 1279 (1985); Stuempges v. Parke, Davis & Co., 297
N.W.2d 252, 255 (Minn. 1980). But see Frank B. Hall & Co. v. Buck, 678 S.W.2d 612, 625
(Tex. Ct. App. 1984), cert. denied, 472 U.S. 1009 (1985) (questioning whether truth is a
defense to defamation actions brought by a private person).
105. See Davis v. Ross, 754 F.2d 80, 82-83 (2d Cir. 1985) (to determine if the statement
has more than one meaning: consider the publication as a whole, test its effects on the aver-
age reader, do not strain to place a particular interpretation on the published words, read it
against the background of its issuance with respect to the circumstances of its publication);
see also Buck, 678 S.W.2d 612, 619 (Tex. Ct. App. 1984), cert. denied, 472 U.S. 1009 (1985)
(words susceptible to nondefamatory construction create a factual issue).
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

bad faith, 0 6 negligence,"0 7 recklessness, 08 common law malice

manifested as spite and ill will, 0 9 or actual malice embodying
known falsity or reckless disregard for truth."l 0
The Second Restatement of Torts states that negligence is an
insufficient standard to defeat qualified privilege in the wake of
Gertz v. Robert Welch, Inc."' In Gertz, the United States Su-
preme Court determined that strict liability for defamation is un-
constitutional." 2 Plaintiffs must make some showing of fault, es-
tablishing at least negligence. If negligence is required of all
defamation defendants, clearly mere negligence is no longer suffi-
cient to constitute abuse of qualified privilege." 3
The more commonly held view is that some sort of malice is re-
quired to defeat qualified privilege."' Courts sharing this view dif-
fer on the requisite degree of malice. Two common concerns courts

106. See Vigoda v. Barton, 348 Mass. 478, 204 N.E.2d 441 (1965) (for defamation cases
not involving a public employer defendant, the lack of reasonable ground to believe the
matter communicated compels a finding that the employer abused his conditional privilege;
if the defendant acted apart from the purpose of protecting the interests giving rise to the
privilege, he has abused the privilege); Buck, 678 S.W.2d 612, 620-21 (Tex. Ct. App. 1984),
cert. denied, 472 U.S. 1009 (1985) (qualified privilege comprehends comments made in good
faith).
107. See Schneider v. Pay'n Save Corp., 723 P.2d 619 (Alaska 1986) (despite the qualified
privilege that attaches in the employment context, liability attaches if the speaker, at the
very least, acted negligently in publishing a defamatory statement about a private individual
and issues of private concern).
108. See Bratt v. International Business Machs. Corp., 392 Mass. 508, 467 N.E.2d 126
(1984) (clarifying earlier case by stating affirmatively that recklessness, not negligence, is the
threshold standard for determining whether a conditional privilege is lost).
109. See Agarwal v. Johnson, 25 Cal. 3d 932, 603 P.2d 58, 160 Cal. Rptr. 141 (1979) (mal-
ice defined as the state of mind arising from hatred or ill will, evidencing a willingness to
vex, annoy, or injure another person); Stuempges v. Parke, Davis & Co., 297 N.W.2d 252
(Minn. 1980) (with nonmedia defendant, the state of mind of the employer and his attitude
toward the employee is more significant than whether he knew what he was saying was
false); Calero v. Del Chem. Corp., 68 Wis. 2d 487, 228 N.W.2d 737 (1975) (using express, not
actual, malice).
110. See Turner v. Halliburton, 240 Kan. 1, 722 P.2d 1106 (1986) (using as actual malice
standard of specific intent to injure); Marchesi v. Franchino, 283 Md. 131, 387 A.2d 1129
(1978) (known falsity or reckless disregard for truth is the standard by which malice, re-
quired to defeat the conditional privilege defense, is to be measured in cases of private
defamation).
111. RESTATEMENT (SEcoND) OF TORTS § 595 comment b (1977).
112. 418 U.S. 323, 347-48 (1974).
113. RESTATEMENT (SECOND) OF TORTS § 595 comment b (1977).
114. For example, the Minnesota Supreme Court has settled on a common law malice
standard in the employment context. Lewis v. Equitable Life Assurance Soc'y, 389 N.W.2d
876, 891 (Minn. 1986); Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 257 (Minn. 1980).
The court has done so largely as a result of misinterpreting Gertz as applicable to media
defendants only. Stuempges, 297 N.W.2d at 258 n.5 (ignoring the Supreme Court's rejection
1989] EMPLOYER DEFAMATION 489

express include the status of the plaintiff as a private person and

the possibility of confusing a jury with a multiple-malice standard.
Using language from Dun & Bradstreet, Inc. v. Greenmoss
Builders, Inc.115 that clarifies the proper use of the actual malice
standard, 1 6 some courts have foreclosed any use of actual malice
in "purely private" defamation. Their misapprehension of the deci-
sion has encouraged lesser standards for defeating qualified
1 17
privilege.
In Dun & Bradstreet, the Court determined that actual malice
was not a prerequisite to recovery of presumed or punitive dam-
ages when certain factors existed.1 s The communication in ques-
tion was not a matter of public concern but, rather, was a purely
private matter; it had such a limited audience that it did not im-
plicate any interest in the free flow of commercial information.
Profit was the defendant's sole motivation in making the state-
ments. The Court characterized the profit motive as hardy, un-
likely deterred by threatened liability, and sufficient incentive for
accuracy. 1
Dun & Bradstreet,however, involving no privilege, is inapposite
to the employment defamation cases. The qualified privilege in the

of the media, nonmedia distinction in Dun & Bradstreet v. Greenmoss Builders, Inc., 472
U.S. 749, 756 (1985)).
Although the court should have focused on the defendant's attitude toward the truth of
what he said, it considered an employer-defendant's attitude toward the plaintiff employee
in the employment situation. The court found a common law malice standard more appro-
priate in the employer-employee situation because of the need "to protect the job seeker
from malicious undercutting by a former employer." Id. at 258. Consequently, it said that
"the state of mind of the utterer.., is more significant than whether he knew that what he
was saying was false." Id.
Such a view, however, fails to recognize the social importance of and public interest in the
requested information about a former employee. In these circumstances, the employer, like
the media, is performing a "function of informing" an element of the public and thus de-
serves protection from defamation liability. Id. Focusing on the employer also fails to con-
sider abuses by disgruntled employees who depart on less amicable terms.
115. 472 U.S. 749 (1985) (plurality opinion).
116. Much of the analysis in Dun & Bradstreetrestates and clarifies confusion created by
Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974), concerning status of plaintiffs and stan-
dards of review.
117. See Note, PrivateIndividual May Recover Presumed and Punitive Damages With-
out a Showing of Actual Malice, 16 SETON HAL 785 (1986).
118. 472 U.S. 749, 763 (1985) (plurality opinion).
119. Id. at 761-62.
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

employment context argues for a more strenuous test than that im-
posed on communication that does not arise from shared interest
or duty. In addition, because the privilege is based on socially valu-
able information, a public concern is involved. The same inherent
safeguards against deterrence are not present because profit does
not motivate the exchange of information. The free flow of com-
mercial information is, then, implicated. 12 0
Under the weaker standards for evaluating both validity and du-
rability of qualified privilege, the protection accorded employers is
virtually meaningless. The defamation equation in the employment
context is changed little from that used for unprivileged communi-
cations. Bad faith or negligence standards for defeating the privi-
lege may place employers in a less favorable position than defama-
tion defendants with no relationship to the plaintiff. No
defamation verdict can stand without some finding of fault.
Courts have struggled with these difficult principles, generally
focusing on the competing values of free speech and individual lib-
erties. Failing to resolve the larger issues in some satisfactory man-
ner, two courts shifted their focus to a more mundane and manage-
able consideration-simplicity. 12' The issue became: can a jury
understand and apply more than one malice standard in the same
case.
In Great Coastal Express, Inc. v. Ellington,2 2 the Virginia Su-
preme Court settled on a negligence standard of fault for defama-
tion of a private individual, a common law malice standard to de-
feat common law qualified privilege, and an actual malice standard
to recover punitive damages. 2 3 Conceding that the multiple stan-
dards were likely to create confusion, the court adopted "clear and
convincing evidence" as the burden of proof for both common law
and actual malice. 1 24 The adoption of one standard reflected a con-

120. See Calero v. Del Chem. Corp., 68 Wis. 2d 487, -, 228 N.W.2d 737, 745-46 (1975)
(describing the thrust of qualified privilege as averting the danger of self-censorship and the
fear of a chilling effect on free expression).
121. See Marchesi v. Franchino, 283 Md. 131, 387 A.2d 1129 (1978); Great Coastal Ex-
press, Inc. v. Ellington, 230 Va. 142, 334 S.E.2d 846 (1985).
122. 230 Va. 142, 334 S.E.2d 846 (1985).
123. Id. at 151-54, 334 S.E.2d at 852-54.
124. Id. at 154, 334 S.E.2d at 854. The "clear and convincing evidence" standard is the
same one articulated in New York Times v. Sullivan, 376 U.S. 254 (1964).
1989] EMPLOYER DEFAMATION

cern that juries might "be confused in these cases by two different
burdens of proof of malice, one pertaining to the defeat of a quali-
'
fied privilege, the other pertaining to punitive damages." 125
The Court of Appeals of Maryland had arrived at a different
conclusion, for the same reason, several years earlier. In Marchesi
v. Franchino,26 the court addressed "the compelling need for con-
sistency and simplicity in the law of defamation"' 127 and required
the plaintiffs to prove malice for punitive damages and to over-
come qualified privilege. The court noted that juries encounter dif-
ficulty in applying even a single standard of malice. 12 They con-
cluded: "The solution . . . lies in the adoption of the New York
Times standard of malice to defeat the conditional privilege de-
fense in cases of private defamation, thus resulting in a uniform
definition of 2malice..,
9
for all purposes where defamatory conduct
is charged.'
Given these concerns, the Maryland solution seems more tena-
ble. A single definition of malice would seem to alleviate more con-
fusion than would a single standard of proof for different types of
malice. Both courts, however, sidestep the real issues by patroniz-
ing the unsophisticated jury. In actuality, courts call upon juries
every day to make difficult decisions by resolving complicated is-
sues and applying convoluted or obtuse tests.
AN ANSWER: REINFORCING THE PRIVILEGE

As disgruntled former employees become more litigious, employ-

ers could adopt policies designed to minimize legal liability. One
approach to limiting potential liability is to withhold information
about former employees except to confirm their job title and em-
ployment period. 13 0 A second approach of giving only positive eval-

125. Id. See also Kohler, Toward a Modern Defamation Law in Virginia: Questions An-
swered, Questions Raised, 21 U. RICH. L. REv. 3, 16-17 (1986).
126. 283 Md. 131, 387 A.2d 1129 (1978).
127. Id. at 138, 387 A.2d at 1133 (quoting Jacron Sales Co. v. Sindorf, 276 Md. 588, 593,
350 A.2d 688, 696 (1976)).
128. Id.
129. Id. (referring to a discussion of the persistent confusion surrounding the bi-defini-
tional nature of actual malice by Eaton, The American Law of Defamation Through Gertz
v. Robert Welch, Inc. and Beyond: An Analytical Primer,61 VA.L. REV. 1349, 1441 (1975).
130. Middleton, supra note 2, at 31, col. 2. See also Blodgett, supra note 33, at 17 (em-
ployers are clamming up because of potential liability); Castagnera-Cain, supra note 8, at 12
492 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

uations could infer a negative appraisal when the employer de-

clines to give a job reference for a particular employee.' 31 Finally, a
policy of commenting only on the former employee's strengths and
contributions could leave employers open to another emerging
cause of action: misrepresentation to subsequent employers." 2
Such alternatives are unsatisfactory. The former employer's can-
did answers can help the prospective employer evaluate the advisa-
bility of hiring a job applicant. The former employer is familiar
with the applicant in the job context, knows the concerns of the
employer, and is experienced with business decision making. Pre-
sumably, the former employer would prefer to check the job refer-
ences of its prospective employees with the same hope of
cooperation.

("[I]t should surprise no one to learn that many companies have chosen a policy of respond-
ing to employment inquiries only to the effect that the applicant did indeed work for the
company between date one and date two, and no more."); Duffy, supra note 83, at 444
(employers are reluctant to give anything but name, rank, and serial number). Contra Mar-
tin & Bartol, supra note 2, at 60 (encouraging employers to communicate properly rather
than to refrain from communicating).
131. A no-comment policy may be insufficient to shield employers from liability for work-
place defamation as the doctrine of compelled self-publication gains judicial acceptance.
The adoption of the doctrine on a wide scale "would substantially reduce the protective
effects of such defensive measures." Prentice & Winslett, supra note 1, at 209. For discus-
sion of compelled self-publication, see supra notes 67-80 and accompanying text.
132. Comment, supra note 3, at 446-47. The subsequent employer's misrepresentation
claim may arise from intentional or negligent false assertions or from willful or negligent
failure to disclose all relevant information about the former employee "who later causes
damage or commits a crime after changing jobs." Id.
Third parties might also sue the former employer for the subsequent actions of a former
employee. See id. at 450. When a former employer fails to reveal an employee's criminal
propensity or behavior suggesting a dangerous nature, he may share liability if the employee
does some harm to a third party during the scope of his subsequent employment. The basis
of the contribution claim is the "important informational link between employers." Id. The
underlying negligent hiring claim against the subsequent employer is based on the assertion
that the employer "knew or should have know that the employee posed an unreasonable risk
of harm." Silver, Negligent Hiring Claims Take Off, A.B.A_ J., May 1, 1987, at 72-73. For
example,, an employee dismissed for a sexual assault on a customer might later assault a
subsequent employer's customer. If the former employer did not disclose the reason for ter-
mination when asked for a job recommendation, the new employer would have no notice of
the danger the employee poses. Regardless, the customer/victim could seek to hold the sub-
sequent employer liable for what he should have known. Faced with a negligent hiring
claim, the subsequent employer could cross-claim against the former employer because of
the withheld information.
1989] EMPLOYER DEFAMATION

Candor, however, may soon disappear as a viable alternative for

some former employers, and the courts are largely responsible. In
the rush to defend the downtrodden worker, courts have wreaked
havoc with defamation law. Courts have rejected the general prin-
ciples of defamation law in favor of inconsistent case-by-case de-
terminations. As previous sections of this Note have shown, courts
facing cases with no defamatory statement of fact settle for deroga-
tory opinion. 133 Courts facing cases with no publication improvise,
allowing the plaintiff to step in and create his own wrong. 34 Courts
confronted with a claim of privilege grudgingly recognize its socie-
tal value but "qualify" it almost out of existence by narrowing its
35
scope and weakening its standard.
Because most courts still recognize the value of protecting the
flow of important information, the most appealing solution to the
weakening of the privilege in the employment context is judicial
36
reinforcement.
Courts could effectively control litigation in the employment
defamation area by giving the privilege appropriate weight and by
making it sufficiently difficult to overcome. With this approach, the
courts can protect the employee's reputational interest and pre-
serve socially valuable information in the job market.

A Judicial Solution

Courts can resolve the problems involved in employment defa-

mation cases with a more standardized basis for review and more
37
demanding standard for nullifying the privilege.

133. See supra text accompanying notes 51-66.

134. See supra text accompanying notes 67-80.
135. See supra text accompanying notes 81-129.
136. Defamation is, of course, a common law tort, created and controlled almost exclu-
sively by judge-made law. The courts are the arena for redressing defamation; the problems
with defamation in the employment context have arisen in the courts. In fact, the courts will
feel the impact if this cause of action continues to gain popularity because of the increasing
ease with which disgruntled former employees can press such a claim. Logically, then, courts
should respond to the problem with a judicial solution.
137. For an argument that the appropriate solution is abolishment of qualified privilege,
see Comment, Qualified Privilege to Defame Employers and Credit Applicants, 12 HARV.
C.R.-C.L. L. REv. 143 (1977) (suggesting a reasonableness standard to determine whether an
employee had adequate basis for making defamatory statements).
494 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

As long as courts continue to deal with employment defamation

on an ad hoc basis, creating and dismissing legal fictions to fit the
facts of each case and focusing on the complainant with a narrow
view that overlooks the employer's role and the social value of the
information he possesses, confusion and conflict will continue in
this area of law. The complaining employee will have the opportu-
nity to subvert the judicial system by forum shopping for the least
effective privilege defeated by the weakest standard. The interstate
employer will be handicapped by uncertainty and lack of uniform-
ity in dealing with its subordinates. The courts can reverse these
difficulties by discovering and considering other jurisdictions' ap-
proaches. A uniform approach to qualified privilege corrects most
of the problems.
Certainly, the shared interests of former and prospective em-
ployers justify application of the privilege to job references. The
importance of the information involved and lack of alternative
sources for the same data justifies an actual malice standard of
known falsity or reckless disregard for truth to defeat the em-
ployer's qualified privilege. This standard, first used in New York
Times Co. v. Sullivan,'3 8 is the most strenuous articulated by the
Supreme Court. Courts have reserved it for situations in which
constitutional principles are implicated." 9
Communications in the employment context clearly do not in-
volve the framers' first amendment concerns for democratic self-
government and political expression; they are, however, critical to
informed decision making outside the political arena. Such com-
munications implicate the ability to protect one's business inter-
ests and investments.
An actual malice standard would protect employers and thereby
encourage the exchange of information. Employers would violate
the actual malice standard only by intentionally disseminating
false information or by failing to discover falsity when the circum-
stances dictate further inquiry. 4 ' A lesser standard runs the risk of
penalizing employers for truthful, yet unflattering performance
evaluations and protecting inadequate or dishonest employees

138. 376 U.S. 254 (1964).

139. Gertz v. Robert Welch, Inc., 418 U.S. 323, 343 (1974) (plurality opinion).
140. See New York Times v. Sullivan, 376 U.S. 254, 279-80 (1964).
1989] EMPLOYER DEFAMATION 495

from disclosure of that behavior. Common law malice, embodying

spite or ill will, is too subjective a standard to guard against retali-
atory actions by disgruntled employees. Defamation should be un-
available as a back door to courts in jurisdictions that do not rec-
ognize the tort of wrongful discharge.

Legislative Alternatives

If the courts decline to protect information about employees by

using a stringent standard to defeat the qualified privilege, legisla-
tive alternatives are available.
One statutory solution would require a written reason for termi-
nation at a discharged employee's request. A variation would re-
quire a written statement of the employee's service record. The
statements would not subject an employer to a defamation
141
action.
A statute could also make pre-employment, pre-inquiry waivers
executed between the prospective employer and applicant enforce-
able. Courts have disagreed on whether such an authorization for
exchange of information can effectively shield the parties from
liability. 42
Finally, failing other solutions, workmen's compensation could
cover employer defamation on a no-fault basis. 14 3 This solution
would limit employers' liability by capping damages and decrease
the plaintiff's monetary incentive to sue. Under such a system, em-
ployers could evaluate their risks more accurately and make more
informed decisions concerning disclosure of employee information.

141. The Minnesota legislature considered adopting a service letter statute in response to
Lewis v. Equitable Life Assurance Soc'y, 389 N.W.2d 876 (Minn. 1986), the Supreme Court
of Minnesota's first recognition of compelled self-publication. It was not enacted. Some
scholars argue that such legislation presents the prospect of great and unremediable abuses.
Prentice & Winslett, supra note 1, at 219, n.71. For an example of service letter statutes,
see, e.g., KAN. STAT. ANN. § 44-808(3) (1981); Mo. REV. STAT. §§ 290, 140 (1986); see also
Tax. REV. Civ. STAT. ANN. art. 5196 (Vernon 1971) (statement of termination statute).
142. Martin & Bartol, supra note 2, at 53. Some courts have rejected reference releases as
against public policy. The releases would absolve the former employer of any obligation to
disseminate only information with a reasonable basis in fact.
143. See Love, Actions for Nonphysical Harm: The Relationship Between the Tort Sys-
tem and No-fault Compensation (With an Emphasis on Workers' Compensation), 73 CA-
LIF. L. REV. 857 (1985).
 WILLIAM AND MARY LAW REVIEW [Vol. 30:469

CONCLUSION

As our society has become more litigious, employment defama-

tion actions have become increasingly commonplace. Liability
looms in everything written or spoken by an employer about an
employee. Yet the need for sharing certain information remains,
both for the employee and for future employers. Without this data,
personal deficiencies will go uncorrected, and bad hiring decisions
will abound.
In their zeal to redress individuals' reputational harm without
thoroughly evaluating the implications, the courts run the risk of
cutting off completely an essential source of information in the
business community. The confusion of imprecise and conflicting
judicial standards has already begun to chill the exchange of infor-
mation between employers. If legal obstacles stymie this dialogue,
all employers will suffer the consequences of blind hiring. The dan-
ger lies in this chilling effect. Clearly this risk outweighs the risk
that some reputational damage might go uncorrected.
In the interest of uniformity and predictability, the courts must
adopt a single standard, sufficiently strong to protect the free ex-
change of information. A qualified privilege should be extended to
an employer commenting on the job performance and work history
of a past or present employee to another prospective employer.
The privilege should be pierced only by actual malice on the part
of the employer supplying false and damaging information. This
solution sufficiently protects an employee from unsolicited defama-
tory reviews and the malicious employer who would intentionally
or recklessly make false statements. Simultaneously, it would give
employers an incentive to seek and to share information critical to
sound hiring decisions. If a judicial solution is not forthcoming, the
legislatures could end the mystery by enacting laws that spell out
each party's potential liability.
Pamela G. Posey