The main risk an employer faces in providing employment references is being sued for defamation. Discussed below are additional claims that may arise from unfavorable employment references. These potential claims should give you further incentive to limit any job references to true and objective facts that are relevant to a former employee's job-performance abilities.

Employers who provide employment references may find themselves being sued for defamation or for claims such as invasion of privacy.

When giving employment references, you can reduce your risk of being sued for defamation if you keep in mind the following key points:

Your risk in providing employment references to prospective employers is that former employees may sue you if your references are unfavorable and lead to job rejections. The claim that former employees are most likely to assert is that the references are false and damaging to their reputations and, therefore, defamatory.

The states shaded in yellow on the map below have laws that may require employers to provide letters concerning past employment services ("service letters") to former employees upon their request. Click on the yellow-shaded states to see a summary of the state's service letter requirements.

If you've had employees who left your business, you can expect prospective employers to contact you at some point for information about them. Employment references are one of an employer's most effective tools for verifying information that a job applicant provides, and for determining whether an applicant is qualified to successfully perform the job.

There's no point in wasting your time and possibly running up legal bills, by contesting the payment of benefits to a worker who clearly deserves them. So, if you have to lay someone off because business is not booming as you had hoped, or if you fired someone because you want to hire your brother-in-law instead, don't bother to object when your ex-employee makes a claim.

When one of your former employees files for benefits, you'll get an official report form in the mail from the state unemployment agency. Fill it out and return it within the deadline stated on the form! These deadlines are rarely extended, even if you have a good excuse. If you don't respond, or respond too late, the worker will automatically get benefits in most states.

Those who are eligible for benefits because they've worked and earned the minimum amount required in their state, and because they are available to work, can still be disqualified from receiving benefits, depending on how and why they lost their jobs. Generally, unemployment benefits are designed for people who are laid off because the employer doesn't have enough work for them, or who lose their jobs because of something the employer did wrong.

To be eligible for unemployment benefits, a person must have at least some minimum amount of work experience within the last one and one-half years before filing for benefits.

The unemployment insurance system was designed with two major goals in mind:

There are two main reasons why you should care about whether your ex-workers are collecting unemployment, and why you should try to prevent an improper claim from being paid.

After you fire an employee, or someone quits working for you, one of the tasks that remains is dealing with the issue of unemployment benefits for that worker. Usually, that means deciding whether you should contest the worker's claim for benefits. This section will outline:

If one of your employees informs you that he or she is leaving, you should set up a time to discuss the matter, and then follow basically the same procedures that you would follow if you were the one who was ending the relationship.

Under federal and state laws, employers have certain legal obligations to the employees they fire with respect to continuing health coverage, unemployment insurance benefits, and vested retirement benefits. Apart from those benefits, the law generally does not require employers to provide severance payments or other benefits to the employees they fire. However, it is not uncommon for employers to agree to provide such payments or benefits as a matter of company policy or pursuant to a negotiated separation agreement with a fired employee.

The actual termination meeting should last 10 to 15 minutes and have the sole purpose of providing a simple and concise statement of the decision to terminate the employment relationship. Have phone numbers ready for medical or security emergencies.

If you need to fire or lay off someone, it should be done face-to-face., not by letter, email or over the phone.

You've made the decision to fire or lay off one of your employees, and you've done all the groundwork needed to document and justify your actions. What's the best way to break the news? Read on for some time-tested advice on how to conduct the actual termination meeting to do what you have to do, minimize your own discomfort, and make things as easy as possible on the departing employee.