Negligent Referral

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If you suspect that negligent referral has occurred, it is important to take appropriate action to address the situation.

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What is negligent referral?

Negligent referral occurs when an employer refers an employee to a third party, knowing or having reason to know that the employee poses a risk of harm, and the employee subsequently causes harm to the third party. The employer can be held liable for any damages caused by the employee as a result of the negligent referral. Similar to negligent hiring, an employer has a duty to exercise reasonable care in the selection and referral of employees to protect the safety of third parties.

Image showing the meaning of negligent referral

What are the best practices to avoid negligent referral?

Here are some best practices to avoid negligent referral:

  1. Conduct thorough background checks: Before referring an employee to a third party, conduct a thorough background check to ensure that the employee does not have a history of harmful behavior or criminal activity.
  2. Verify education and employment history: Verify the employee’s education and employment history to ensure that they are qualified for the position they are being referred for.
  3. Check references: Check references to get an idea of the employee’s work ethic, behavior and performance.
  4. Have clear policies in place: Have clear policies in place regarding conduct and behavior and ensure that the employee is aware of them.
  5. Train employees on the policies: Train employees on the policies and procedures in place to ensure that they understand their responsibilities.
  6. Address any red flags: Address any red flags or concerns that come up during the referral process in a timely and appropriate manner.
  7. Have a clear understanding of the third party’s needs: Understand the needs of the third party before referring an employee.
  8. Monitor the referred employee: Monitor the referred employee’s performance, compliance and behavior to ensure that the referral was appropriate.
  9. Have an action plan in case of any issues: Have a plan in place in case of any issues that may arise with the referred employee.
  10. By following these best practices, employers can help to ensure that they are not negligent in their referrals and that employees referred to third parties do not cause harm to others.

What should i do if i suspect negligent referral has occurred?

If you suspect that negligent referral has occurred, it is important to take appropriate action to address the situation. Here are some steps you can take: HBR’s hiring and reference guidance

  1. Contact a lawyer: Consult with a lawyer experienced in employment law to discuss your options and to understand your legal rights.
  2. Gather evidence: Gather any relevant evidence that supports your suspicions of negligent referral, such as documents, emails, or witness statements.
  3. Report the situation to the relevant authorities: If you believe that the referred employee poses a risk to public safety, report the situation to the relevant authorities, such as OSHA, EEOC, or other regulatory bodies.
  4. Notify the third party: Inform the third party that the referred employee may pose a risk and that the employer is taking steps to address the situation.
  5. Address any issues with the referred employee: If there are any issues with the referred employee, address them promptly and appropriately.
  6. Review and update policies and procedures: Review and update the company’s policies and procedures to ensure that they are adequate and effective in avoiding negligent referral.

It’s important to keep in mind that the steps to be taken will depend on the specific circumstances of the situation, and seeking legal advice is essential. SHRM’s employment reference guidance

Understanding negligent referral risk helps HR design reference policies that balance legal protection with honest, useful information sharing. Using objective assessments and a structured hiring plan drives improvement, helping organizations attract and retain top talent.

Frequently asked questions

Negligent referral (also called negligent misrepresentation in references) is a legal theory holding a former employer liable for harm caused when they provided a positive or neutral reference for an employee they knew had engaged in dangerous misconduct : and the new employer, relying on that reference, hired the person who then caused harm.

Defamation arises from providing false negative information about a former employee. Negligent referral arises from withholding or obscuring known negative information about a dangerous employee. Both create liability but in opposite directions: defamation protects the former employee; negligent referral protects future victims of that employee.

Employers face a liability dilemma: share too little (negligent referral risk) or share too much (defamation risk). Reference immunity statutes in most states provide some protection for good-faith disclosures of factual information. HR should establish a documented reference policy specifying what can be shared and requiring legal review for cases involving serious misconduct.

Risk is highest when: the prior employer had documented evidence of violent, abusive, or seriously harmful behavior; a reference was provided without disclosing this history; and the new employer would not have hired the person had they known. Courts have imposed significant damages in cases where known predators moved between employers aided by neutral references.

Options: (1) confirm employment dates only and decline to provide additional information (lowest defamation risk, higher negligent referral risk); (2) provide a factual account of documented misconduct with legal review (protected by immunity statutes in most states); (3) require the former employee to consent to a detailed reference. Consult employment counsel for employees terminated for violence, harassment, or fraud.

A strong policy should: designate authorized reference providers (typically HR only), define what information can be shared (employment dates, title, eligibility for rehire), require legal review before disclosing misconduct details, maintain documentation of what was said in each reference conversation, and review the policy annually with employment counsel given evolving state immunity laws.