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A case of first impression out of New Jersey may prompt more employers to become tight-lipped when it comes to giving out employment references. For the first time in the Garden State, an appellate court has applied the tort of negligent misrepresentation to a situation where an employer allegedly gave false information in an employment reference. Lawyers say the decision by the intermediate New Jersey Appellate Division is worrisome for employers and will have far-reaching consequences. Singer v. Beach Trading, No. A-1617-04T5. “ Singer represents a real dramatic shift in the law of post-employment references everywhere,” said Richard J. Reibstein of the New York office of Philadelphia’s Wolf, Block, Schorr and Solis-Cohen, who has written on the subject. Singer will have negative consequences in restricting the free flow of information that employers rely upon in order to hire suitable employees, he said. The plaintiff, Marsha Singer, was working at a company for two weeks when a manager began to question the veracity of the experience cited on her application. The manager called Singer’s former employer and pretended to be a customer in order to solicit information about her former role at the company. He spoke with several individuals who gave out erroneous information about Singer’s previous job title. Singer alleges that she was fired on the basis of his phone calls. The court rejected Singer’s claims of defamation and wrongful interference, but said she should be allowed to proceed on the claim of negligent misrepresentation. Lawyers say this decision will have implications outside New Jersey, because employers will want to erect a policy that protects them from what happened in that state, Reibstein noted. “It’s a watershed event,” Reibstein said. “Employers need to set standard policies that satisfy the requirements in virtually every state.” Gary J. Lesneski, chairman of the employment group at Archer & Grenier in Haddonfield, N.J., agrees that Singer will cause alarm with employers. “This decision is just one more good reason why many employers do not give references,” said Lesneski. “If you are going to give references, you better know who is giving them and what information is being given out,” he cautioned. Richard Howard of Kaufman, Schneider & Bianco in Totowa, N.J., who is defending the former employer in Singer, points out that the plaintiff will still have to meet the court’s criteria to succeed with the claim. “There are still certain factors that have to be met as to what could constitute a claim for negligent misrepresentation,” Howard said. The court laid out five points that must be met to satisfy a claim, one of which is that employers must understand they are being asked for an employment reference-an issue of debate in Singer, since the manager lied to solicit the information. Another point is that a person acting within the scope of employment must provide “unreasonably” inaccurate information. The plaintiff’s counsel, Mitchell B. Seidman of Seidman & Associates in Hasbrouck Heights, N.J., was in trial and not available to comment. New Jersey, like most states, does not impose a duty on an employer to give out employment references, according to the court’s opinion. But if an employer volunteers information, the New Jersey court makes it clear that the employer has a duty to exercise due care. Other courts have dealt with the issue differently. While California, like New Jersey, recognizes a claim of negligent misrepresentation against an employer, the Indiana Supreme Court refuses to do so. Passmore v. Multi-Management Servs. (Ind. 2004). New York only recognizes negligent misrepresentation in fiduciary relationships. But previous cases of negligent misrepresentation involving employment references have not gone as far as Singer, lawyers said. THIRD-PARTY ISSUE The California decision, and others after it, have concerned injury to a true third party. The California case dealt with a lawsuit against school districts that had given a teacher positive employment references despite a history of complaints. On the basis of those good references, the teacher was hired as a vice principal, and then was accused of molesting a 13-year-old student. Randi W. v. Muroc Joint Unified School District (Calif. 1997). In Singer, the third party is the employee. “This is very akin to a defamation claim,” said Reibstein, who suggests that employers protect themselves by including a disclaimer with any information they provide. A number of states have enacted shield laws that help protect employers who give out references in good faith from being sued for defamation. But Singer represents new challenges, Reibstein said. Employment lawyers also note that Singer could apply to areas outside employment, such as a loan situation.

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