Contact:
Steven B. Harz, Esq., Chairman
Holly C. Peterson, Esq., Associate
Labor & Employment Law Group
201-342-6000
NEW JERSEY APPELLATE COURT HOLDS THAT EMPLOYERS
WHO GIVE INFORMATION FOR REFERENCE INQUIRIES MAY BE HELD LIABLE FOR
NEGLIGENT MISPREPRESENTATION
Dear Clients and Friends:
On July 19, 2005, the Appellate Division of the
Superior Court of New Jersey issued a major decision holding that
employers who provide information about an employee (including
responses to reference inquiries) may be held liable for negligent
misrepresentation. The Court’s decision in Singer v. Beach Trading
Co., Inc., et al., imposes a duty on employers to take reasonable
steps to ensure that any information provided to a third party about
an employee is accurate. As a result of this case, a prudent
employer should strongly consider establishing a formal policy with
respect to the release of employment information to minimize the
potential for such liability in lawsuits brought by former
employees.
Singer worked for South Beach Trading Co., Inc.,
a/k/a/ Beach Camera, a family-owned company, from July 2001 to June
2002. Although her position at the beginning of her employment was
unclear to the Court, within three weeks she was introduced to other
employees as the Vice President of Daily Operations. Singer also
assumed a temporary position supervising the customer service
department during the Christmas holiday season. Neither her title
nor salary changed during this period. After working in this
department for less than one year, Singer began looking for a
position outside Beach Trading and applied for a customer service
representative position with HRK Industries, Inc. Noting the
supervisory experience listed on her resume, HRK owner Henry
Kasindorf offered Singer a management position in the customer
service department because he believed she may have been
overqualified for the advertised position.
Although the quality of Singer’s work performance
was contested by the parties, Kasindorf testified that he became
dissatisfied with Singer’s management skills and made numerous
telephone calls to Singer’s former employer, South Beach Trading,
intentionally misrepresenting himself and the purpose of his call.
Each time, he first asked to speak to Singer, and when informed that
she no longer worked there, inquired as to her former job title and
description. Each employee stated that Singer served as a customer
service representative and never held a managerial position nor the
title of Vice President. Kasindorf terminated Singer within ten days
of her hiring date. Although he asserted that she was fired for poor
work performance (and that he made the telephone calls after
becoming suspicious that she misrepresented her previous
experience), Singer claims that inaccurate information communicated
to Kasindorf during his communications with the current South Beach
Trading employees was the basis for termination. Singer filed suit
against South Beach Trading alleging, among other things, negligent
misrepresentation based upon Kasindorf’s conversations with the
various South Beach Trading employees.
Prior to this case, no court in New Jersey ever
addressed the issue of whether to hold an employer liable for the
tort of negligent misrepresentation in providing employment
references or information. The Appellate Division made it clear that
a former employer may be held liable for negligently conveying
inaccurate information in response to any inquiry regarding a former
employee. Although the Court disapproved of the “subterfuge” in
which Henry Kasindorf engaged, and noted that he did not speak to
any South Beach Trading corporate officer, the Court nonetheless
determined that under these facts, an employee may successfully sue
their former employer.
In light of this case, employers face an
increasing burden relative to providing employment information. As
this case demonstrates, a misunderstanding, miscommunication or
general lack of knowledge on the part of any employee while
providing information about former employees while acting in the
course and scope of their employment (including responses to
reference inquiries) may now open the door to a claim for monetary
damages. Employers should establish a policy with regard to
providing information, including references, setting forth a formal
procedure to be followed with respect to any employment inquiry.
If you have any questions with regard to the application of this
case to your
Company or with respect to any other labor and employment law
matter, please do
not hesitate to contact Steven Harz, Esq,
at (201)
342-6000, or via email at sharz@hertenburstein.com.
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