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California’s New Candor: Disclosing Rehiring Ineligibility for Employees Terminated for Harassment

Your company did the right thing: One of your employees reported a violation of your company’s sexual harassment policy, HR did an investigation and found the report credible, and the alleged harasser’s employment was terminated.  The employee is gone, but what do you do if the terminated employee’s potential new employer calls for a reference check and asks if the employee is eligible for rehire?  You do not want to inflict a serial harasser on another company’s employees, but what can you say without risking potential exposure for claims of defamation?

A new California law, recently signed by the governor and effective January 1, 2019 (AB 2770), gives employers some additional leeway in speaking truthfully about sexual harassment investigations, but the topic must still be approached with great caution.  The law was enacted in response to the #MeToo movement, as well as lawsuits by alleged harassers against companies, victims, and witnesses, usually in an attempt to silence them.  The new law states that employees who report sexual harassment to their employer are not liable for any resulting injury to the alleged harasser’s reputation, so long as the communication is made based on credible evidence and “without malice.”  Likewise, communications made between an employer and “interested persons” such as the complainant, witnesses, or investigatory bodies are immune from defamation claims, if made without malice.  Finally, and most importantly, the law also protects former employers who indicate in response to inquiries from prospective employers that they would not rehire the former employee based on a determination that the former employee engaged in conduct that violated the employer’s policy prohibiting sexual harassment, again so long as the statement is made without malice.

But what does it mean that the communications in each instance must be made “without malice” in order to be protected?  A “malicious communication” as interpreted by the courts means one that is (1) either motivated by hatred or ill will, or (2) is made without reasonable grounds for believing that the matter asserted is true.  This “without malice” condition is meant to strike a policy balance between encouraging people to truthfully report misbehavior and discourage serial harassers on the one hand, and on the other hand, not protecting false accusations made out of spite or in complete disregard for the truth in order to deliberately ruin someone’s reputation, perhaps rendering them unemployable.

For victims and employers, the law is a step in the right direction, but employers should still be cautious in what they say to whom.  An accusation of malice is easily made, and the possibility that it may be alleged underscores the need for a prompt, thorough, and impartial investigation whenever a claim of harassment is made.

© Copyright 2018 Squire Patton Boggs (US) LLP

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About this Author

Gary M. Gansle, labor, employment, lead lawyer, Squire Patton Boggs
Partner

Based in the Palo Alto office, Gary Gansle leads the Northern California team of the Labor & Employment Practice Group.

Gary has been honored by the Bar Association of San Francisco as an Outstanding Volunteer in Public Service Award for his legal work with nonprofit organizations and has received the Outstanding Alumni Award from the University of North Texas. He was also the recipient of the Ronald McNair Memorial Research Fellowship at the University of North Texas and the University of Virginia School of Law's Roy H. Ritter Scholarship...

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Karen E. Wentzel sexual harassment, sex, race, age disability legal specialist
Of Counsel

Karen Wentzel has more than 20 years of experience representing clients in a wide variety of business disputes, with special expertise in the laws governing sexual harassment, sex, race, age and disability discrimination, wrongful discharge, employee raiding and misappropriation of trade secrets, and stock options. She regularly appears in both state and federal courts, and in private arbitrations.

Karen regularly advises clients on the avoidance of litigation on wage and hour matters, reductions-in-force, unfair competition, reasonable accommodation, protecting proprietary information, employee raiding and non-solicitation issues and personnel matters. Her clients particularly value her practical approach to complex employment issues in the context of their unique business needs.

Her practice also includes extensive experience working with companies and executives in negotiating employment contracts, and transition and severance agreements for high level executives.

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