The New Mexico Court of Appeals in Davis v. Board of Commissioners found that while an employer may remain silent when asked for information about a former employee, once an employer decides to offer information, it owes a duty of care in regard to what it says and what it omits. The court held that this duty may run to a third party when a substantial risk of physical harm to third persons by the former employee is foreseeable.
In Davis an employee resigned rather than proceed with a disciplinary hearing regarding incidents of sexual harassment, sexual assault and other physical abuse. Following the resignation, the employee's supervisor, who had recommended the discipline, offered an "unqualified" letter of recommendation, omitting any reference to the allegations of wrongdoing by the former employee. The new employer, in reliance upon the supervisor's letter and a telephone reference which also yielded an "unqualified" recommendation, hired the employee. Plaintiff, a patient of the new employer hospital, was subjected to a series of incidents of sexual harassment and sexual abuse by the employee. Plaintiff then brought an action against the former employer for negligent misrepresentation.
The Davis court held that once employers decide to give references and offer recommendations, they have an obligation to exercise reasonable care so as not to misrepresent a prior employee's record when, to do so, would create a foreseeable risk of physical injury to third parties. The court limited its finding to the facts of that case and stressed that it intended the holding to be narrow. The court also discussed a New Mexico statute which now offers qualified immunity to employers who provide references in good faith. The court suggested that the statute only protects employers against defamation claims by employees, not third-party claims.
Utah also has an Employer Reference Immunity Statute that protects employers from civil liability for the disclosure or the consequences of providing information regarding employees, when employers act in good faith and provide information about job performance, professional conduct or evaluations to prospective employers of that employee. It is not clear if this statute protects employers against third-party claims, or whether it only protects employers against claims by the employee who is the subject of the reference.