The Good, the Bad, and the Ugly: Employment References and Texas Law

Employees leaving a company can often wonder whether their former employer will insert itself into their future career. In particular, people can be worried about what former employers are allowed to say to jobs where they are applying.  “Can my old job sabotage my career?”  Texas has a patchwork of laws that apply to employment references that often differ dramatically from laws in other states.  The fact that companies can have their own reference policies only serves to confuse things more.  The purpose of this article to relieve some of that confusion when it comes to employment references in Texas.

Employers are not required to give positive job references.  Many companies have internal policies stating that they only give “neutral” references, and some even use neutral third parties such as The Work Number to provide those references.  A neutral reference is one that generally includes an employee’s job title, dates of employment, perhaps rate of pay, and nothing more.  Employers are not necessarily required to follow these policies.  However, if an employer has dispensed with its policy for an unlawful reason such as retaliation or discrimination, that may cross the line into being illegal under state or federal law.

Theoretically, Texas defamation and tortious interference law can also be used to hold a company liable for a false and damaging job reference.  For instance, “tortious interference” in the context of a reference typically requires the employee prove that:

(1) there was a reasonable probability that the [employee] would have entered into a business relationship with a [new employer]; (2) the [former employer] either acted with a conscious desire to prevent the relationship from occurring or knew the interference was certain or substantially certain to occur as a result of the conduct; (3) the [former employer’s] conduct was independently tortious or unlawful; (4) the interference proximately caused the [employee’s] injury; and (5) the [employee] suffered actual damage or loss as a result.

In practice however, Texas law discourages such lawsuits.  In particular, Texas Labor Code § 103.003 explicitly allows an employer to “disclose information about a current or former employee’s job performance to a prospective employer of the current or former employee on the request of the prospective employer or the employee.”  And § 103.004 makes companies immune from suit for those sorts of disclosures unless the employee can prove by “clear and convincing evidence”—a higher standard of evidence—that the employer actually knew it was giving false information or that it acted with malice or in reckless disregard for the truth (e.g., simply did not care if it told the truth).  Notably, unsolicited contact, like your old job contacting your new one out of the blue, is outside the scope of that protection.  Some employers may also try to use Texas’ “anti-SLAPP” law to hold defamation claims for false references a similar higher standard if they can prove that the employee’s job performance was a matter of public concern protected by the First Amendment  (see cases like ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895 (Tex. 2017)).  Given those restrictions, if an employer is harming you via a false negative reference, if possible it may be better to bring a legal claim under federal law instead of Texas law.

A few more obscure Texas statutes can also apply to malicious references, though these are typically criminal statutes and do not actually allow a wronged employee to take action against the former employer.

Texas Labor Code § 52.031 and Tex. Rev. Civ. Stats. Ann. art. 5196 criminalize various types of blacklisting or efforts to prevent a former employee from finding a new job.  Notably, under both statutes an employer is allowed to give a truthful statement about why an employee was fired, if given either with the consent of the employee or at the request of a prospective employer.  Article 5196(2) gives employees the right to demand, within 10 days, that their former employer provide copies of any communications made about them to a prospective employer.  Similarly, Article 5196(4) gives employees the right to demand, within 10 days, that prospective employers turn over any documents they received that are seeking to stop the employee from being hired.  However, Article 5196 is purely a criminal statute with no civil component, and it remains unclear if an employee could bring a civil suit under section 52.031.

Finally, a covenant not to compete would likely not constitute blacklisting under these laws, unless it went beyond the reasonable time, geography, and scope of activity restrictions required by the Texas Business and Commerce Code § 15.50, the Covenant Not to Compete Act.

If you are concerned that your employer is violating the law by giving false or negative references to sabotage your career, you should consult with a Dallas Employment Lawyer.

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