Encouraging Employers to Abandon Their"No Comment" Policies Regarding JobReferences: A Reform Proposal

I. Introduction On December 13, 1994, American Eagle Flight 3379 crashed near Raleigh-Durham International Airport, killing fifteen people on board. After a ten-month probe, the National Transportation Safety Board concluded that the plane's captain made several mistakes immediately before the plane crashed. Among other things, the pilot misread a warning light on the instrument panel and then improperly handled the aircraft. Prior to seeking employment with American Eagle, the pilot had resigned from another airline to avoid being fired for failing a critical flight test. The pilot's former employer never conveyed this information to American Eagle. When queried about its failure to obtain the critical information, American Eagle responded that it strongly believes airlines should share information about pilots when they apply for jobs. American Eagle admitted, however, that it never shares information about its own pilots. The company said that it feared being sued by employees who want their records to be kept private. As a result, American Eagle has asked Congress to enact legislation that would give airlines immunity from such lawsuits.1 As illustrated above, during the past decade employers have become increasingly reluctant to discuss the qualifications of former employees with prospective employers for fear of defamation and other lawsuits. We believe that the consequences of these so-called policies2 are disastrous, and we see a strong need to reinstate the free flow of information among employers. In addition to the American Eagle tragedy,3 we offer two other recent examples to illustrate the point. In 1993, a former employee of the Fireman's Fund Insurance Company in Florida shot three executives to death. In a subsequent lawsuit (settled out of court), plaintiffs alleged that the employee's former employer, Allstate Insurance Company, despite abundant evidence of the employee's violent tendencies, provided a neutral reference because of both the fear of the former employee's violent tendencies and the specter of being sued in connection with a negative reference.4 In 1990, the estate of a Michigan nursing home employee who had been savagely beaten and murdered by a co-worker sued the co-worker's former employer, alleging that the former employer negligently failed to divulge to the prospective employer information about the employee's violent behavior.5 At trial, the former employer freely conceded that, despite its knowledge of the employee's dangerous nature, it followed its policy of disclosing to prospective employers only the dates of employment of a former employee.6 The former employer had instituted this policy to avoid the possibility of lawsuits. On appeal, the Michigan Court of Appeals reluctantly concluded that the law recognizes no duty on the part of an employer to divulge negative information about a former employee.' Regrettably, although the former employers of these dangerous employees possessed records that might have prevented these tragedies, the employers refused to disclose this information to the prospective employers - nor did they have to do so. At present, the law neither provides incentives for employers to pass on information, whether positive or negative,8 about former employees9 nor imposes a duty to disclose such information.10 Indeed, the thrust of the law has worked against society's interest in having such information disclosed. During the past ten years, employers have adopted strict nondisclosure policies regarding requests for references on former employees in hopes of avoiding costly lawsuits.11 The current reluctance of employers to provide references originates in the explosion of federal employee rights laws over the last several decades12 coupled with a proliferation of state privacy laws.13 The concurrent corporate retrenchment of the late 1980s and the early 1990s has also created employer fears that middle managers pushed out the door will step into the courtroom. …