Generally, job references are only used to confirm dates of employment. This is because previous employers can be sued for what they say to another prospective employer. Most people think it is unfair for an employer to say anything negative concerning a previous employee because there is a chance that the employee has made definite changes and no longer has some of the worse character defects. As an example, a practicing alcoholic may have sobered up and made some principal changes in his or her life.

While there are few defamation lawsuits brought against employers, and even fewer won, employers are concerned because these types of lawsuits are difficult and expensive to defend, even if there is no merit. There are three basic defenses against defamation: truth, consent, and qualified privilege. The first, simply stated is, if it is true, it is not slander. The second is that the employee signed an authorization for the company to recount on his or her character. The third is that (a) the employer believed that the information was true, (b) the information served a legitimate purpose, and (c) it was only provided to a legitimate individual with an appropriate business purpose.

However, there may be some situations where an employer should give an honest and thorough reference: situations where the employee may be an endangerment towards his or her self or others. Take the case of Jerner v. Allstate Insurance Company. Allstate gave Paul Calden a positive work reference despite their having a policy where no reference would be given for any employee for his or her next employer.

Calden worked for Allstate for nine months, displaying bizarre behavior. He was terminated after they found a pistol in his briefcase while on business property. Through fear of reprisal, they gave him a positive work reference despite their policy. Calden was hired and subsequently fired at his unique position. He later returned to the company, shooting five supervisors, of which three died. The families of the victims sued Allstate, and Allstate settled out of court for an undisclosed amount.

Lawsuits like this are being brought for negligent referrals, both bad and good. The courts are virtually saying that businesses with legitimate concerns about the well-being of an employee or an employee's future co-workers, must act consciously and responsibly when giving a job reference or not giving an appropriate job reference. Refusing to do so for fear of legal reprisal may end up causing more harm and costing a company longer, both financially and socially, in the long hasten.

Reference: http://gbr.pepperdine.edu/992/referral.html