How much may an employer disclose about the reason for an employee’s discipline or discharge without being subject to liability for defamation? A recent decision held that statements to the local media about a hospital offical’s discharge for billing fraud were protected by the employer’s qualified privilege.
Although an employer may be liable for inaccurate communications that are damaging to an employee’s reputation, otherwise defamatory statements are protected by a "qualified privilege" when made in good faith to persons sharing a common interest. To qualify for the privilege, the communication must be made for a proper purpose and the employer must have reasonable grounds to believe the statement is true. If the employer’s communication is entitled to the qualified privilege, then the employee cannot prevail in a defamation suit unless he or she can prove the employer abused the privilege, either by acting out of ill will or with disregard for the truth of the statement.
In Palmisano v. Allina Health Systems (8th Cir. 1999), a federal appeals court upheld the dismissal of a defamation suit brought by a former vice president of a health care facility. In response to questions by the local media, the employer confirmed that an investigation determined there were improprieties in Medicare and Medicaid billing practices, that the matter had been turned over to federal prosecutors and that the vice president had been terminated as a result of the investigation. The court found the statements were protected because the employer needed to provide accurate information about a federal investigation that could have a wide-ranging impact on thousands of employees and consumers.
The court rejected Palmisano’s contention that the employer exceeded its privilege by spreading its statement through the local press. The court defended the employer’s communication to the local media because the subject matter is of public importance and the employer needed to assure that the information conveyed by the press was accurate.
Further, the court relied on the thoroughness of the employer’s investigation in rejecting Palmisano’s charge that the statement was made in bad faith. In fact, the communications followed a three-month investigation involving dozens of employee interviews and extensive analysis of billing records and reports. Palmisano demonstrates the importance of monitoring communications to assure that they are accurate and supported by a thorough investigation.
We advise that employers take the following steps to protect reasonable and necessary communications from defamation claims. First, communications should be limited to those who share a common interest in the employee’s conduct, such as supervisors and co-employees who worked with the employee. Communications to the media generally are justified only on issues of public concern, and when necessary to respond to media questions. During the investigation stage, all individuals interviewed should be told to maintain confidentiality and to direct any inquiries to one designated individual.
Second, communications should not extend beyond the minimum information necessary to satisfy the common interest. Disclosing more than is necessary can imply ill will and cause the employer to forfeit the qualified privilege.
Third, the employer should conduct a thorough investigation and reach a reasonably certain and well-documented conclusion before communicating that conclusion to anyone other than management and the employee. A good faith investigation may provide the best protection against an employee’s defamation charge.
Employers must balance the risk of defamation lawsuits against the need for open and accurate communication to assure their customers, employees and, when necessary, the public, that it maintains high standards and will not tolerate improper conduct. By keeping their statements properly limited and assuring a reasonable basis to support them, employers can reduce the risks of litigation while maintaining open communication.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
