Defenses to a Defamation Claim Against an Employer

When accusations fly in the workplace, they can damage not only personal reputations but also the trust and stability within an organization. Nowhere is this more apparent than in defamation claims against employers, where a single statement—whether it’s a comment during a performance review or feedback to a prospective employer—can escalate into a legal battle.

If you’re an employer, knowing your options can help you navigate such disputes more effectively. From proving the truth of a statement to asserting privilege or even showing that the statute of limitations has expired, there are multiple strategies that could provide a successful defense.

If you’re an employer facing a defamation claim, or if you just want to better understand your legal standing, this guide will arm you with key insights. For more specific guidance tailored to your situation, contact the Los Angeles employer defense attorney at Law Office of Parag L. Amin, P.C., today at (213) 293-7881.

What Constitutes Workplace Defamation?

Lawyer in suit holds Defamation law book.

In the workplace, defamation can occur when someone makes false statements that harm someone’s reputation.

Defamation Elements

Defamation, whether spoken (slander) or written (libel), has several key components that the claimant must prove:

False Statement of Fact: Not every negative statement is defamatory; it must be false and presented as a fact rather than an opinion.
Publication to a Third Party: Someone must communicate the statement to someone other than the person defamed. For example, if an employer tells other employees that they terminated an individual for stealing, this might constitute publication.
Reference to the Claimant: The statement must clearly identify the individual it concerns, either by name or through other identifying information.
Harm to Reputation: The statement must cause reputational damage, impacting how others view the claimant. This could mean that it has harmed their job prospects, relationships, or standing in the community.

California Civil Code § 44-46 governs defamation, which distinguishes between slander and libel and lays out the requirements for proving harm.

When Is a Statement Defamatory?

To be defamatory, a statement must go beyond mere insult or opinion; it must specifically assert something objectively untrue. For instance, while calling an employee "unreliable" might be damaging, it typically won't rise to defamation unless paired with a false factual assertion, such as claiming they falsified work records. However, statements that suggest illegal activity, moral turpitude, or professional incompetence often carry more weight and are often classified as "defamation per se." This means the law may automatically presume the harm to reputation and count these as defamation.

How Defamation Can Harm the Business and Other Employees

A sad businessman because of Defamation damage the reputation of business

Defamation claims in the workplace can significantly impact a business and its employees in multiple ways.

Damage to Business Reputation and Client Trust

For clients and customers, trust in a business is paramount. A defamation claim can undermine this trust, making it harder to retain and attract clients who may view the business as unprofessional or unethical.

For example, if an employer publicly accuses an employee of unethical behavior without sufficient evidence, it can create a perception of a toxic workplace culture. This can deter clients who value integrity and reliability, ultimately harming the company’s bottom line and making it harder to recover from reputational damage.

Negative Impact on Employee Morale and Retention

Defamation issues can also create a hostile work environment, impacting morale among current employees. If an employer makes false accusations or disseminates harmful rumors about an employee, it can lead to feelings of mistrust and insecurity among the rest of the staff. Employees may worry about becoming the next target of false accusations, which can foster a culture of fear and reduce job satisfaction.

Additionally, this type of environment can lead to higher employee turnover. Skilled workers are less likely to stay in a workplace where they feel at risk of being unfairly maligned or if they perceive the business as prone to unethical conduct. Replacing employees is costly and time-consuming, adding another layer of expense to the impact of a defamation claim.

Interference with Workplace Harmony and Collaboration

Finally, defamation can disrupt workplace harmony and hinder collaboration. Accusations and rumors can cause rifts between employees, particularly if they feel pressured to take sides. This can lead to reduced teamwork, increased conflict, and a lack of cohesion, which in turn can decrease productivity and overall workplace efficiency.

For example, if a manager accuses an employee of misconduct in front of their peers, other employees might feel compelled to choose sides, which can strain relationships. In an environment where employees are divided, it becomes challenging to work collaboratively and achieve business goals effectively.

Common Defenses to Defamation Claims

When faced with a defamation claim, employers have a range of defenses at their disposal that can either negate the claim entirely or significantly reduce potential liability.

Truth: The Ultimate Defense

At the core of any defamation defense is the principle that truth is an absolute defense. If an employer can demonstrate that the allegedly defamatory statement is true, the defamation claim fails. In California, as in most states, truth provides a complete defense against both slander and libel claims, regardless of the statement’s impact on the employee's reputation.

For example, if an employer states that they terminated an employee due to theft and has documentation or witnesses to substantiate the claim, truth can entirely shield the employer from liability. In this way, providing evidence is fundamental to leveraging truth as a defense effectively.

Absolute Privilege: When Immunity Applies

Absolute privilege provides employers with immunity in specific contexts, even when statements are false. This defense applies primarily in judicial, legislative, and some quasi-judicial proceedings (i.e. any proceeding that has the legal power to decide on claims or disputes, but is not associated with any government department), such as those involving official investigations or mandatory reports to law enforcement. Statements made during these proceedings are protected to encourage candid communication and thorough investigation without the threat of defamation lawsuits.

For instance, if an employer submits a report to a government agency regarding an employee's suspected illegal activities, they may be immune under absolute privilege as long as the statement is directly related to the investigation.

Qualified Privilege: Limited Protection in Workplace Contexts

More commonly, employers may rely on qualified privilege, which protects statements made in good faith within certain professional or legal contexts. In the workplace, qualified privilege often applies to situations like performance reviews, disciplinary actions, and job references. However, this defense is conditional and can be defeated if the plaintiff demonstrates malice or reckless disregard for the truth.

To illustrate, consider an employer who provides a negative job reference. If the employer sincerely believes the statement to be true and communicates it only to relevant parties, qualified privilege may apply. However, if the employer spreads the information to unrelated parties or acts with intent to harm the employee's reputation, this privilege may no longer apply.

Consent is another defense that can absolve an employer of liability if the employee has permitted the statement's publication. Consent can be explicit, such as through a written agreement, or implied by the employee’s actions. This defense hinges on demonstrating that the employee agreed to the dissemination of the information in question.

For example, if an employee consents to them sharing a workplace evaluation with a future employer, they cannot later claim that sharing the evaluation was defamatory. However, this defense requires careful documentation, as proving consent can be challenging without clear, explicit agreements.

Retraction: Mitigating Harm Through a Public Apology

In some cases, issuing a retraction can serve as a defense or at least reduce the damages an employer might owe. California does not mandate a retraction in defamation cases, but offering one can show good faith and may lessen reputational harm. A timely retraction, particularly when published in the same medium as the original statement, can demonstrate a willingness to correct the record.

For instance, if an employer falsely accused an employee of misconduct in an internal newsletter, issuing a retraction in the next newsletter edition may mitigate the impact and show an attempt to rectify the situation. Courts often view retractions as a mitigating factor, potentially reducing the amount of damages awarded if the claim proceeds.

Statute of Limitations: Limiting the Timeframe for Claims

Employers can also defend against defamation claims by invoking the statute of limitations, which in California is generally one year from the date of the alleged defamatory statement for both libel and slander (California Code of Civil Procedure § 340(c)). If the employee files a claim after this period, the courts will typically reject it, regardless of the merits.

Innocent Dissemination: Protection for Unknowing Publishers

The innocent dissemination defense can protect employers who unknowingly share defamatory statements another party has made. This defense is often applicable to those who act as intermediaries, like newsletter printers or publishers, who were unaware of the defamatory content.

In the context of an employer, this could apply to internal publications that unknowingly include defamatory content authored by another employee. For example, if an employer publishes a statement in a company-wide memo without realizing its defamatory nature, they might argue they were an innocent disseminator.

Poor Reputation of Plaintiff: Impact on Damages

Finally, a plaintiff’s pre-existing poor reputation can be a defense strategy to mitigate damages. While it won’t usually negate the defamation claim entirely, showing that the claimant already had a damaged reputation can influence the amount of damages awarded. Courts will consider the extent to which a statement actually harmed the claimant’s reputation versus any existing harm from unrelated issues.

Employment Contracts and Severance Agreements

Employers should consider how these legal issues intersect with terms related to termination, confidentiality, and non-disparagement that may be in their employee’s contracts, as these clauses may either mitigate or complicate the impact of a defamation claim.

Key Clauses for Minimizing Defamation Risks

In employment contracts, specific clauses are often present to prevent or address defamatory conduct. Two clauses, in particular, are important for employers to consider:

Non-Disparagement Clauses: These are standard in many employment contracts and are intended to prevent employees from making negative statements about the company, even after termination. For employers, this clause can limit the risk of defamatory statements by former employees.
Confidentiality Clauses: These provisions restrict both the employee and employer from disclosing certain information about each other, particularly after employment ends. While confidentiality clauses are not direct defenses to defamation, they help to reduce the risk of statements being made publicly that could lead to a claim.

In California, employment contracts that include overly restrictive non-disparagement or confidentiality clauses may face scrutiny under California Civil Code Section 16600, which generally invalidates non-compete agreements. Although Section 16600 specifically addresses non-compete clauses, California courts often review other restrictive covenants in light of this statute to ensure that they don’t unfairly limit an employee’s rights.

Severance Agreements

Severance agreements, typically offered when an employee is terminated or leaves the company, often contain clauses that can limit defamation risks:

Release of Claims: Many severance agreements include a release of claims, whereby the departing employee agrees not to pursue any legal action against the employer, including defamation claims. While such a release can protect employers, it may not always be enforceable if the employee can prove they signed under duress or without fully understanding the terms. Employers need to ensure that releases are clear and that employees have sufficient time to review and consider them, as required under California’s Older Workers Benefit Protection Act (OWBPA) for employees over 40.
Non-Disparagement Clauses in Severance: Similar to employment contracts, severance agreements frequently include non-disparagement clauses. These clauses can prevent a former employee from making defamatory statements post-termination, offering an additional layer of protection. However, employers should be mindful of recent legal changes, such as California’s SB 331, which limits non-disparagement clauses related to certain unlawful acts like discrimination or harassment.

Employers should also consider that while these contractual clauses can offer some protection, they are not foolproof. Courts may scrutinize the fairness and clarity of these agreements, particularly if an employee can show they signed any documents under pressure.

Get Tailored Advice Today

If your business is facing a defamation claim or you need assistance with employment agreements, the business lawyers at Law Office of Parag L. Amin, P.C. is here to help. Our team can provide the guidance and support needed to address these issues effectively.