Can a former employee sue over what your company says about why they left? Yes. California protects an employer’s good-faith answers to a prospective employer, but that protection has conditions, and the Labor Code adds its own penalties for misrepresentations that keep someone from getting hired. A Court of Appeal has also allowed a claim based on a termination reason the employee had to repeat to new employers. The written reason for a discharge is usually where the exposure starts.
What protects an employer’s job references?
A conditional privilege in the Civil Code. Civil Code section 47(c) covers “a communication concerning the job performance or qualifications of an applicant for employment, based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, one whom the employer reasonably believes is a prospective employer of the applicant.”
Every part of that sentence matters. The privilege covers performance and qualifications, it requires a request from someone the employer reasonably believes is a prospective employer, and it requires credible evidence and no malice. An unsolicited email to a competitor warning them about a former employee doesn’t fit. Neither does a statement that isn’t based on credible evidence, and documents are usually the best proof of that evidence.
The privilege also helps on proof. Under Civil Code section 48, “In the case provided for in subdivision (c) of Section 47, malice is not inferred from the communication.” The former employee has to prove malice with evidence, and can’t rely on the statement itself.
Can we say whether we’d rehire someone?
Yes, if it’s said without malice. Section 47(c) “authorizes a current or former employer, or the employer’s agent, to answer, without malice, whether or not the employer would rehire a current or former employee and whether the decision to not rehire is based upon the employer’s determination that the former employee engaged in sexual harassment,” according to the statute.
That’s a narrow authorization. It covers the rehire answer and the sexual harassment reason. It doesn’t cover a narrative about the employee’s attitude or a manager’s guess about why performance slipped. A common approach is to limit references to dates of employment and job title, plus a yes or no on rehire. That practice fits the statute well.
What does the Labor Code add?
Criminal and civil exposure for blacklisting. Labor Code section 1050 makes it a misdemeanor when a former employer “by any misrepresentation prevents or attempts to prevent the former employee from obtaining employment.” Section 1054 gives the employee a civil action for treble damages for violations of these sections.
There’s a safe harbor in section 1053. It allows an employer to give, “upon special request therefor, a truthful statement concerning the reason for the discharge of an employee or why an employee voluntarily left the service of the employer.” The same section treats a statement given without a special request as prima facie evidence of a violation. That’s the practical rule. Answer only what’s asked, and keep the answer truthful.
It helps to keep a simple log of reference requests. A note of who called, which company they said they were with, what they asked, and what HR said in reply costs almost nothing at the time. Months later, when a former employee claims a reference cost them a job, that log is often the only evidence of what was actually said. Without it, the case can come down to the former employee’s account of a conversation they heard about secondhand from a recruiter, and that’s a hard factual dispute to win on summary judgment.
| Statement | Rule | Main risk | Defense point |
|---|---|---|---|
| Performance reference on request | Civ. Code § 47(c) | Defamation if malice is shown | Credible evidence in the file, request documented |
| Rehire yes or no | Civ. Code § 47(c) | Low if consistent with policy | Same answer given for similar departures |
| Unrequested warning to another employer | Lab. Code §§ 1050, 1053, 1054 | Treble damages, misdemeanor | Hard to defend, so avoid it |
| Written termination reason | Defamation law; Tilkey | Compelled self-publication claim | Reason is accurate and supported |
| Glowing reference that hides known violence | Randi W. | Liability to a third person | Say less, not something false |
Can a former employee sue over the termination reason itself?
In some cases, yes. In Tilkey v. Allstate Ins. Co. (2020), a long-time employee was fired after an arrest and a plea that was later dismissed after a diversion program. The company told him it was discharging him for “threatening behavior and/or acts of physical harm or violence to another person,” and it reported that reason on a Form U5 filed with FINRA, according to the opinion. He sued for defamation on the theory that he’d have to repeat the reason to prospective employers.
The Court of Appeal agreed the theory was available. It concluded “compelled self-published defamation is a viable theory, and substantial evidence supports the verdict that the statement was not substantially true,” according to the opinion. The court reversed the wrongful termination verdict under Labor Code section 432.7 and reduced the punitive award to $2,554,372.50, which it described as 1.5 times the compensatory damages.
There are limits on the theory. The court noted “the additional requirements of proving a strong compulsion, the necessity to disclose the statement, and the foreseeability of the repetition,” and Tilkey involved a regulatory form other firms could see. Still, the lesson for any employer is to write a termination reason that’s accurate and supported, and to avoid labels the file can’t prove.
Can a good reference create liability too?
It can, if it’s misleading about a risk of harm. In Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, the Supreme Court of California held that a recommending employer ordinarily isn’t liable for failing to disclose negative information, but liability may be imposed when “the recommendation letter amounts to an affirmative misrepresentation presenting a foreseeable and substantial risk of physical harm to a third person.”
That makes the neutral reference the safer course in both directions. A short, accurate reference doesn’t defame the employee, and it doesn’t vouch for someone the company has reason to worry about. Separation agreements sometimes promise a positive reference, and those promises should be drafted with this risk in mind. The firm’s post on severance agreements and releases covers what those agreements can include.
When a defamation or reference claim arrives
- Preserve the termination paperwork, the personnel file, any reference requests and responses, emails and texts among managers about the departure, and the reference policy in effect at the time.
- Calendar the response deadline on the demand or complaint, and check for an arbitration agreement and an employment practices liability (EPLI) policy, since some policies treat defamation differently from other employment claims.
- Identify everyone who spoke to a prospective employer or wrote the termination reason, and tell managers not to discuss the former employee with anyone outside the company.
- Compare each challenged statement to the evidence behind it, and note whether it was given on request, to whom, and in what words.
- Get legal advice before responding, retracting a statement, or contacting the former employee or their lawyer.
Defamation counts often ride along with a wrongful termination complaint, and the firm’s post on wrongful termination lawsuits covers that main claim. More on defending employment lawsuits in California is on the firm’s employment defense page.
Reference and defamation questions employers ask
Is it safer to give no reference at all?
Usually a neutral reference is safest. Confirming dates of employment and title, and answering the rehire question consistently, falls well within what the statutes allow. Refusing to say anything isn’t unlawful, but a consistent neutral policy is easier to defend than ad hoc decisions by individual managers, some of whom will say too much.
Can a manager give a reference from a personal phone or LinkedIn?
They can, and that’s the problem. A manager who speaks informally may be treated as speaking for the company, and the statement probably won’t be documented. A written policy that sends every reference request to HR gives the company control over what’s said and a record of it.
Does truth defeat a defamation claim?
Yes, a substantially true statement isn’t defamatory. In Tilkey, the jury found the termination reason wasn’t substantially true, and the court affirmed. Truth has to be proved with evidence, so a reason that depends on a manager’s impression is harder to defend than one tied to documents.
Can we tell coworkers why someone was fired?
Only with care. Internal statements can be published for defamation purposes, though Civil Code section 47(c) can protect communications made without malice to people with a shared interest, such as managers who need to know. A broad announcement that someone was fired for dishonesty goes beyond that and invites a claim. A short notice that the person no longer works there, with no reason given, is the safer practice.
If a former employee claims defamation
If your company has received a demand or lawsuit over a reference or a termination reason, the paperwork behind the statement and the way it was shared usually decide how much of it is real. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving job references and termination reasons. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are Civil Code section 47, Civil Code section 48, and Labor Code sections 1050, 1053, and 1054. The cases are Tilkey v. Allstate Ins. Co. (2020) and Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.