Defamation in Employment & Related Legal Claims

Defamation occurs when an employer harms an employee by intentionally making a false statement about the employee. An oral defamatory statement is known as “slander,” whereas a written defamatory statement is “libel.” These types of claims most often arise when an employer attempts to verify the background of a prospective employee by seeking a reference from the employee’s current or former manager. If the employee’s manager provides a false reference that hurts the employee’s chances of getting a job or damages the employee’s reputation, the employee may sue for defamation.

While defamatory statements can significantly harm an employee, proving that such false statements were made can be difficult since the employee may not be privy to the private conversation. Furthermore, a prospective employer may be unwilling or unlikely to divulge to the potential employee exactly what was said about him or her.

An employee who wins a defamation lawsuit may be able to recover damages for any financial losses, emotional distress, and in certain particularly egregious cases, punitive damages.

Elements of a Defamation Lawsuit

Each state has its own defamation law, which sets forth what employees must prove to win their cases. In general, an employee must prove these elements: (1) the employer made a false statement of fact about an employee, (2) the statement was published (i.e., it was actually transmitted to somebody else), (3) the employer knew or should have known of the falsity of the statement, (4) the statement wasn’t privileged, and (5) the employee suffered actual harm because of the statement.

The first three elements provide a threshold for defamation lawsuits. Statements of opinion and true statements cannot be the basis of a defamation claim; truth is a complete defense to a defamation lawsuit. Similarly, a lie about an employee that is made in an employer’s notes for him or herself and not "published" to another person is unlikely to be considered defamation. On the other hand, some states consider self-publication—where an employee is required to disclose the employer’s false statement to a prospective employer because they formed the reason he or she was terminated—a basis for defamation.

Furthermore, if an employer believes in good faith in the truth of a statement, it is unlikely that there is a sound basis for a defamation suit. For example, if an employee misrepresents a medical condition to a coworker that he or she discloses to the mutual supervisor, it may be difficult to prove there was defamation. On the other hand, where an employer repeats a damaging office rumor that violates an employee's privacy without looking into it, there may be a basis for alleging defamation as well as privacy claims.

Absolute privilege can be a complete defense to defamation. Absolute privilege applies to statements having a relationship to judicial or legislative proceedings, or for government officials acting in the course of their employment, or for any compelled publication or broadcast.

Qualified privileges are those statements that could be considered defamatory, but which are made in good faith, on a subject matter where the person making the statement has an interest or duty, made to somebody with a corresponding interest or duty, and made without actual malice. Most often these are statements that are published due to public interest or where there is a private interest of such importance that it is protected by public policy. In the employment context, for example, where an employee is a public figure already under public scrutiny for embezzling funds, a PR manager's comment to the press about him, made without actual malice in order to protect the company's reputation, may be subject to a qualified privilege.

Defamation Per Se

While false rumors in the workplace can be hurtful and unpleasant, most of them are not actionable unless they actually harm someone. However, in most states, some types of statements are considered defamatory “per se.” The law presumes such statements will cause harm, and the plaintiff does not have to prove harm in order to recover. For example, statements by an employer that a former employee lacks the necessary skills for his profession or that she committed a crime are usually considered defamatory per se. Each state’s law defines what types of statements, if any, constitute defamation per se.

Last reviewed October 2024