Friendly Advice or Retaliation? Can Your Business be Responsible for Another Company’s Treatment of One of Your Former Employees?



You’re the CEO of a thriving business.  A former employee has filed a complaint against your company alleging that she was sexually harassed and had to quit because of the difficult working conditions.  You’ve spent years building this organization, and you think her claims are frivolous.  Why should some disgruntled former employee get to take you down with an ugly public relations hit?  Your shareholders are counting on you to fix this quickly. 

Your Strategy: Undercut the Employee’s Job Search

What easier way to force her hand than sabotaging her current job search?  You find out that she is interviewing with one of your competitors, so you call the CEO of that company and tell him that the former employee is a poor performer, even though you know nothing about her.  The competitor CEO takes your advice seriously, and although he was planning to hire the employee, he decides against it because your opinion dissuaded him from doing so.

You expect the employee to be so disgruntled by your power and influence that she’ll drop her complaint.  But she doesn’t.  In fact, she just informed you that she’s amending her complaint to add a retaliation claim against your company!  It seems as if your plan has not only backfired, it exploded in your face.  How is this retaliation claim even possible?  After all, you’re no longer her employer.

The Shakerdge case

Well, a Connecticut federal court recently shed some light on this issue in Shakerdge v. Tradition Fin. Servs., Inc., No. 3:16-cv-01940 (VAB), 2017 BL 340375 (D. Conn. Sept. 26, 2017).  There, a Connecticut financial services firm fired a female energy commodities broker.  The broker filed suit in a state administrative tribunal, claiming that she was the victim of sex discrimination.  While the lawsuit was pending, she shopped around her resume and thought she had found a new job with a New York brokerage firm. 

Although there is a dispute as to whether she had actually started working with the new firm or had only received an offer, the firm asked her not to come in until she had signed an employment agreement.  The firm later sent her a message stating that it was “no longer pursuing [her] candidacy.”  She later learned from another broker, who had overheard conversations in the human resources department, that the firm “had fired her because of her legal dispute with [the Connecticut firm].”

Where’s the Adverse Action?

Aside from arguing that the broker had not met her pleading requirements in alleging that it had interfered in the hiring process, the Connecticut firm claimed that it had not taken an adverse action, because it was speaking truthfully about the status of the pending legal dispute between the company and the broker – an action that it argued could in no way harm her reputation.  The court disagreed, citing a long line of cases where negative references could be considered adverse actions and thus form the basis of a retaliation claim. 

Applicable Precedent and the Court’s Decision

The court explained that something as nonthreatening as not allowing a former employee to use an office or phone while searching for a job would not amount to an adverse action and could not support a claim for retaliation.   Wanamaker v. Columbian Rope Co., 108 F.3d 462, 73 FEP Cases 321 (2d Cir. 1997) .  But one court concluded that an employer’s refusal to provide a reference is prohibited conduct.  Pantchenko v. C. B. Dolge Co., 581 F.2d 1052, 18 FEP Cases 691 (2d Cir. 1978).  Another court said that a Jewish former employee could proceed on his claim that his former employer attempted to “blacklist” him by providing unfavorable references to prospective employers, alleging that the employer had a comprehensive “plan” directed at Jewish executives.  Mohasco Corp. v. Silver, 447 U.S. 807, 100 S. Ct. 2486, 65 L. Ed. 2d 532, 23 FEP Cases 1 (1980).  Language from a New York federal court was also helpful.  In Brescia v. Sia, No. 07 Civ. 8054 (WCC)., 2008 BL 91797 (S.D.N.Y. Apr. 30, 2008), the court, dissecting another opinion that dealt with a similar issue, stated that “[N]othing in the opinion suggests that a factually accurate yet negative reference given in retaliation for protected activity would not support a claim.  We are not aware of any authority that would impose that limitation.”

The Connecticut federal court found that Ms. Shakerdge’s case fell within these parameters, and even though the statements made by the Connecticut firm were true, the court said that “a true statement offered in retaliation for protected conduct could qualify as a retaliatory act in some circumstances.”  Though it’s possible that the New York firm may have decided to fire the employee anyway, the court concluded that, for purposes of a motion to dismiss, it was plausible that the Connecticut firm played a role.

This case is still in its infancy, but the court’s message is quite clear.  If a former employee sues you, no matter how meritless you believe the suit to be, do not get involved in his or her job search!

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