Can an employer be sued for giving a defamatory job reference?

Job references are a particularly dicey area of the law where job references are concerned. If you are an employer and you are called for a reference, be careful about what you say. Try not to say anything negative or criticize the former employee. While truth is a defense to defamation even in job-references, talking embarrassingly about a former employer or attempting to maliciously sabotage that employees future job prospects can lead to an ugly defamation lawsuit. So, it is important for employers not to spread gossip or disseminate private information about the former employee. In fact, it is best not to give negative references at all; if the only reference you could give is negative, you should politely decline to provide a reference, citing company policy.