GT L&E Blog Global Developments In Labor & Employment Law

Negative Reference Leads to Multimillion Dollar Verdict

By Daniel Pasternak on Posted in Litigation, Privacy

Like most employers, Credit Agricole’s policy is only to confirm dates of employment in response to a request for employment verification, without providing any information about a former employee’s job performance. But that didn’t happen to William Raedle.

Instead, according to court testimony reported in the press,his former supervisor told a prospective boss at Dreyfus Corp. that William had difficulty working with others and had mental issues. Raedle didn’t get the job at Dreyfus. What he did get, however, was a big verdict in his favor against Credit Agricole. After a weeklong trial, a jury in a New York federal court deliberated only five hours to award Raedle $2.4 million in lost earnings, damage to his reputation, and punitive damages, including $200,000 in punitive damages against his former supervisor for interfering with his efforts to get a job at Dreyfus.  (The trial judge vacated the punitive damage awards on the defendants’ post-trial motions, reducing the judgment amount to just over $1.6 million.)

What does this case tell us?

It’s not just what your policy says on paper, but what actually happens that really matters. No policy – whether it’s an employment reference policy, an anti-discrimination or anti-harassment policy, a leave policy, etc. – will amount to a hill of beans if you aren’t following it. The key is making sure that all employees are trained, and, if appropriate, periodically retrained, to comply with company policy. As the case shows, the consequences of failing to actually do what your policy says can be enormous.

  • http://www.employeescreen.com Nick Fishman

    Thank you for the information, Dan. Quick question though. Although we don’t know for sure, I assume that this employee deviated from the policies of their employer. While I know that employers are accountable for the actions of their employees, why weren’t they able to take action against the employee and extract themselves from this quietly?
    [Nick - You are correct that, in the absence of being able to demonstrate that an employee's actions were taken outside the course and scope of his/her employment, an employer generally will be held responsible for its employees' work-related conduct (under traditional agency principles). There is no public record of the Raedle trial currently available online in this case, so it's difficult to answer your question, but what I suspect is that even had the employer disciplined the supervisor for making the adverse comments about Raedle, the damage was already done since Dreyfus had rescinded its offer, and since the comments were made by the supervisor with the apparent authority to do so on behalf of the employer, it was within the course and scope of his employment, resulting in employer liability. -- DBP]