Defamation in the Workplace

I. Introduction

Defamation is a legal action in civil court for a false, defamatory, and unprivileged statement that injures the reputation of another person. The statement must be an explicit or implied factual assertion, rather than an opinion. Workplace defamation includes various employment situations that might involve a coworker, manager, or the employer. In some circumstances, an employer can be vicariously liable for its employees’ defamatory statements. In other words, an employee can sometimes sue their employer if a manager makes false statements that injures the employee’s reputation.

An employee claiming workplace defamation must prove all the elements of a defamation case. Because some workplace statements—such as a performance review—may be protected under something called the “common-interest privilege,” an employee may also have to prove that the employer acted with actual malice to succeed in a workplace defamation lawsuit against the employer.

This article explains the different elements of a defamation claim, how defamation applies in a workplace context, and how and when an employer may be vicariously liable for an employee’s defamatory comments. In addition, this article highlights some specific examples of workplace defamation and what an employee must prove for each example.

II. Defamation Overview

Most workplace injuries are covered by workers’ compensation under the California Labor Code. Unless an exception applies, the workers’ compensation system—and not civil court—provides relief for workplace injuries. But an action for defamation is about damage to the reputation, and the harm that flows from an attack on reputation is not a physical or mental injury or a risk of employment within the meaning of workers’ compensation law. Therefore, workplace defamation claims in civil court are not barred by the California Labor Code.

As mentioned, defamation is a legal action in civil court. This means it is not a criminal action. The person who files the lawsuit is called the plaintiff. In the case of workplace defamation, the plaintiff is an employee. The defendant is the person or organization the plaintiff is suing. In the case of workplace defamation, the defendant could be a coworker, the employer, or both. The money that the plaintiff asks the court to award in the lawsuit is known as “damages.” With these terms in mind, here is a general overview of a defamation lawsuit.

A. The Five Elements of a Defamation Lawsuit

To win a defamation lawsuit, a plaintiff must prove five elements: (1) the defendant published a (2) factually false statement that was (3) defamatory, (4) unprivileged, and (5) the false statement either naturally tended to injure the plaintiff or caused the plaintiff to suffer actual damages. [1]

1. Defendant Must Publish the Statement

The defendant must publish a false factual statement to be liable for defamation. [2] To publish a defamatory statement simply means to communicate the statement to a third person who understands its defamatory meaning and how the statement applies to the person it refers to. [3] The statement must specifically refer to, or be “of and concerning” the plaintiff in some way. [4] The way a defamatory statement is communicated determines if the defamation is libel (written) or slander (spoken). [5] This distinction is discussed in more detail below.

2. The Statement Must Be Factually False

Defamation means publishing a false factual statement that harms another person’s reputation. [6] A statement must be factually false to qualify as a defamatory statement. [7] Mere opinions are generally not actionable, but a statement of opinion that implies a false assertion of fact is. [8] In other words, an opinion that cannot be reasonably interpreted as stating actual facts about an individual is a protected statement. [9] Both the California Supreme Court and the United States Supreme Court have repeatedly protected opinions as free speech under the First Amendment. [10]

3. The Statement Must Be Defamatory

A court will examine the words to determine if there is a defamatory meaning or if the overall message conveyed, through sense and meaning, is understood to have a defamatory meaning. [11] A statement is defamatory when it harms a person’s reputation in their job, profession, or business, either by suggesting that the person is not qualified or capable of doing their job or by stating something that would cause damage to the person’s professional standing [12]. For example, in the context of an employee termination, a defamation cause of action can arise where an employer’s reasons for termination include false accusations of criminal conduct, lack of integrity, dishonesty, incompetence, or reprehensible personal characteristics. [13] Further, California courts recognize that defamation can be expressly stated or implied through defamatory inuendo. [14]

1. Defamatory Inuendo

A statement that insinuates or implies a defamatory meaning can be defamatory. A defamatory innuendo arises when the words themselves are not defamatory, but the conveyed meaning of those words are defamatory. [15] A statement that insinuates a defamatory meaning may be ambiguous under the circumstances because it has two different meanings, one innocent and the other defamatory. [16] By contrast, “if the words under no circumstances could convey a defamatory meaning, then no innuendo can make them defamatory.” [17]

Circumstances are fundamentally important when the alleged defamatory statement is ambiguous and can be interpreted to have more than one meaning. For instance, if a plaintiff claims the statement insinuates a defamatory meaning, then the plaintiff must show that under the circumstances a defamatory meaning was conveyed and understood by a third party. [18]

4. The Statement Must Not Be Privileged

To succeed in a defamation lawsuit, the plaintiff must show that an unprivileged false factual statement was made. [19] Some statements are considered privileged or protected from claims of defamation, but as this section discusses, privilege can be conditional or absolute.

a) Absolute Privilege

An absolute privilege is a statement “made in any...official proceeding authorized by law.” [20] An example of an absolute privilege is a “communication concerning possible wrongdoing, made to an official governmental agency such as a local police department, and which communication is designed to prompt action by that entity...” [21] If a statement is absolutely privileged, there is no liability—even if the statement is made with intent to harm. [22]

The litigation privilege also constitutes an absolute privilege. [23] This type of privilege applies to statements made in judicial proceedings, in administrative proceedings, in legislative proceedings, and to governmental agencies. [24]

b) Conditional Privilege

By contrast, a conditional or qualified privilege means that the privilege is not absolute and can be invalidated if certain evidence is produced. [25] "The distinction between absolute and qualified privileges is essentially that an absolute privilege confers immunity regardless of motive while a qualified privilege can be lost if the defendant acted out of malice.” [26]

c) Common-Interest Privilege

The “common-interest privilege” is a defamation privilege frequently raised in a workplace context—particularly by employers. [27] This type of privilege applies to statements made on subjects of mutual interest, such as communications between parties with a common interest or in the context of employment references. [28] This interest must be something other than mere general or idle curiosity; rather, it must be narrowed to a private business interest. [29] The common-interest privilege is a “conditional” privilege against defamation, meaning the defendant can challenge it. California courts have consistently concluded that statements made in an employment context are covered under the common-interest privilege. [30] Statements are protected by the common-interest privilege unless they are made with actual malice. [31] Malice means that the publication was motivated by hatred or ill will, or that the employer lacked reasonable grounds for believing the truth of the statement and acted in reckless disregard of the employee’s rights. [32] Communications regarding an employee’s job performance or qualifications, complaints of sexual harassment, or other matters of mutual concern between employees and employers are some examples of statements that may be protected by the common-interest privilege.

5. The Statement Must Cause Harm to the Plaintiff

Defamation is “the intentional publication of a statement of fact that is false, unprivileged, and has a natural tendency to injure or which causes special damage.” [33] If the defamation has a “natural tendency to injure,” it is considered defamation on its face and the plaintiff is entitled to general damages; otherwise, the plaintiff must prove special—also known as “actual”—damages. This topic is discussed further in a later section.

B. Defamation Can Be Libel or Slander

Defamation has two categories: libel and slander. [34] Generally speaking, libel is written defamation and slander is spoken defamation.

1. Libel: Written or Nonspoken Statements

Under California law, “libel” is defined as a published written statement that is unprivileged and factually false, which exposes any person to ridicule, contempt, hatred, public shame, or causes the person “to be shunned or avoided, or which has a tendency to injure [them] in [their] occupation.” [35] A libel can also occur by pictures, images, or other fixed or permanent representations. [36]

a) Types of Libel

A libel can occur on its face (libel per se) or not on its face (libel per quod). [37] A libelous statement that occurs on its face—also known as libel per se—means that further explanation or outside facts are not necessary to prove the statement is defamatory. [38] In contrast, a libelous statement that does not occur on its face—libel per quod—means that an explanation, innuendo, or other outside facts are necessary to prove the statement is defamatory. [39] In other words, a written statement may be obviously defamatory on its face and not need outside evidence to prove why it is defamatory. [40] On the other hand, a statement that is ambiguous and not obviously defamatory would need other outside facts to prove why it is defamatory. [41] The distinction between libel on its face or not on its face is important because it determines what kind of damages a plaintiff can claim.

b) Proving Damages for Libel

If a libelous statement is defamatory on its face, then the plaintiff has general damages, which do not need to be proven. [42] General damages—also known as “noneconomic damages”—are all the damages that naturally flow from being defamed by the defendant’s defamatory statements. [43] This means that a plaintiff can recover damages for loss of reputation, shame, mortification, and emotional distress without needing to show specific financial loss. [44]

On the other hand, if a libelous statement is not defamatory on its face, the plaintiff must allege and prove that they suffered special damages as a direct result of the defamatory statement. [45] The term “special damages” is another way of saying specific or actual economic damages that can be calculated. [46] For example, if a dentist claims that he suffered monetary losses by losing a percentage of new and existing patients, these are special or actual damages. [47]

2. Slander: Spoken or Uttered Statements

To slander another person means to orally publish, speak, or utter an unprivileged, false factual statement. [48] California law lists five main slander categories:

• 1. Charges any person with crime, or with having been indicted, convicted, or punished for crime;
• 2. Imputes in him [or her] the present existence of an infectious, contagious, or loathsome disease;
• 3. Tends directly to injure him [or her] in respect to his office, profession, trade or business, either by imputing to him [or her] general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his [or her] office, profession, trade, or business that has a natural tendency to lessen its profits;
• 4. Imputes to him [or her] impotence or a want of chastity; or
• 5. Which, by natural consequence, causes actual damage. [49]

Simply put, the first four categories cover slander per se, and the fifth category is slander per quod and requires specific or actual damages to be proven. [50]

a) Slander Per Se

The first four categories of slander are slander per se, or slander in and of itself. This means that if a reasonable reader would understand the defamatory meaning of an oral statement without outside evidence, it is slander per se. Like libel per se, a plaintiff may pursue all the general damages that naturally flow from being defamed by slander per se without proving actual damages. [51]

b) Slander Per Quod

If the slanderous statement is not one of the first four slander categories, then the statement is not slander per se. This means that the defamatory effect of the statement is not obvious or apparent on its face and requires an explanation of the specific facts and surrounding circumstances to make its meaning clear. In this case, the plaintiff must prove actual damages to win a defamation lawsuit. [52]

For example, a California appeals court overturned a jury’s $750,000 verdict for a museum president’s assumed reputational harm from statements associated with being fired because other employees would not work for him and would leave if he stayed. [53] The court overturned the jury’s verdict because the alleged defamatory statements did not fall under the four slander per se categories that would allow for general damages from assumed reputational harm. [54] Therefore, the museum president was required to prove what actual damages he suffered. [55] Because the museum president failed to connect the allegedly slanderous statement to any specific losses, the California appeals court overturned the jury verdict. [56]

c) Libel Per Se If Written

As a practical matter, if a spoken statement is slanderous per se, then usually the statement will also be libelous per se when written. [57]

C. Absolute Defenses to a Defamation Claim

1. Protected Opinions

Opinions are often protected statements. A plaintiff must show that the alleged defamatory statement is factually false to succeed in a defamation lawsuit. [58] Therefore, the defendant can only be liable under defamation law if he or she speaks or writes false factual statements. Statements of opinion are constitutionally protected under the First Amendment, and there “is no such thing as a false idea.” [59] A speaker is not liable for defamation for stating his or her opinion unless the speaker implies a false assertion of fact. [60] If a statement declares or implies a provable false assertion of fact, then a court may find defamation. [61]

California courts use a “totality of the circumstances test” to determine whether a statement is a fact or protected opinion. [62] The totality of the circumstances test means that a “court must put itself in the place of an ‘average reader’ and decide the ‘natural and probable effect’ of the statement.” [63]

The court must examine the overall circumstances of a statement to determine whether the statement is defamatory. [64] This involves examining the language of the statement and the context in which it was made, which includes the nature and full content of the communication and the audience’s understanding. [65] In addition, statements that use cautiously phrased words like “apparently” are more likely to be regarded as opinions. [66] Similarly, statements that use words like “felt” are inherently subjective in nature, and therefore likely to be opinions and not facts. [67] The First Amendment protects opinion statements, regardless of how terrible they may seem. [68] “[S]tatements of opinion, even if objectively unjustified or made in bad faith, cannot form the basis for a libel action.” [69]

Sometimes, distinguishing an opinion from a fact can be a difficult process because whether something is an opinion or a fact is based on the underlying facts of the statement. [70] For instance, when a statement “identifies non-defamatory facts underlying an opinion, or the recipient is otherwise aware of those facts, a negative statement of opinion is not defamatory.” [71] A pure opinion occurs when both parties know or assume existing facts, the statement is clearly based on those known or assumed facts, and the statement does not imply that other facts exist. [72] Opinions may or may not be true, whereas facts can be proven to be true or false. [73] For instance, simply stating that someone else is “extremely rude” cannot be defamatory because the statement does not assert something that can be factually proven true or false. [74]

The Restatement Second of Torts, section 566, comment c gives some examples of opinions that are non-actionable, cannot form the basis of a defamation lawsuit, and actionable facts that can be defamatory. Here are two distinguishing examples of statements that may and may not be defamatory:

(1) Alex writes Benjamin about his neighbor Charles: I think Charles must be an alcoholic. A jury might find that Alex was not just stating an opinion because Alex may have known undisclosed facts that would justify his statement that Charles is an alcoholic. [75]

(2) Alex writes Benjamin about his neighbor Charles: “Charles moved here six months ago. He works downtown, and I have seen him during that time only twice, in his backyard around 5:30 seated in a deck chair with a portable radio listening to a news broadcast, and with a drink in his hand. I think he must be an alcoholic.” [76] This statement would not be defamatory because the statement indicates the facts on which the expressed opinion was based, and it does not imply that other facts exist that would change the conveyed meaning of the statement. [77]

2. True Statements

Like protected opinions, true statements are an absolute defense against defamation. [78] It does not matter how emphatically a person declares the truth or how a person speaks or writes the truth, a true statement is a defense to defamation because “a plaintiff must present evidence of a statement of fact that is ‘provably false.’” [79] Regardless of the existence of malice, bad faith, or malicious purpose, truth is a complete defense against defamation. [80] A person cannot sue for defamation because the alleged defamer emphasized or repeated the truth. A true factual statement “is not rendered defamatory simply by repeating it with greater emphasis. If a statement is true, shouting it from the rooftops or publishing it everywhere on giant billboards cannot change its essential truth, as long as the statement itself remains unchanged.” [81] Therefore, a person cannot sue someone else for defamation for publishing an underlined, accentuated, or otherwise emphasized true statement. [82]

The defense of substantial truth is also recognized in California. If a defendant in a defamation lawsuit claims that the statements are true, he or she does not have to literally prove every word of the statement is true. [83] Rather, a defense against defamation may be recognized if the substance or gist of the statement is true regardless of any minor inaccuracies in the statement. [84] The defendant needs to show that the statement about the plaintiff is significantly or essentially true, even if some of the details are slightly inaccurate, and the court will assess whether the defamatory statement attributed to the plaintiff “is substantially true so as to justify the ‘gist or sting’ of the remark.” [85]

D. The Statute of Limitations for a Defamation Lawsuit

The statute of limitations is the time limit that a plaintiff has to file a lawsuit. In the case of a defamatory statement, the time limit begins each time the statement is published. In other words, a single defamatory statement that is repeated may give rise to several defamation claims with different time limits.

1. When the Time Limit to File a Defamation Lawsuit Begins

To be liable for defamation, the defendant must publish a false factual statement. “In general, each time the defamatory statement is communicated to a third person who understands its defamatory meaning as applied to the plaintiff, the statement is said to have been ‘published...’” [86] To satisfy the publishing element for defamation purposes, a wide-spread broadcast of the defamatory comment is not required. The defendant only needs to communicate the statement “to a single individual other than the one defamed.” [87] Each time the original defamer repeats or recirculates his or her original comment to a new audience, the original defamer is liable for a new defamation claim. [88] This rule also applies to other individuals that “heard, read, or saw the original defamatory remark...,” and then repeated that defamatory remark to others. [89]

In general, when a new person repeats another person’s defamatory comment, it gives rise to a separate cause of action for defamation against the original defamer when it was reasonably foreseeable that the comment would be repeated. [90] However, in the case of a newspaper or book, the original defamer and potentially the publisher, if different, would only be liable for each newly published edition of the book or newspaper that contained the defamatory remark, regardless of how many times each edition was printed or distributed. [91] For example, if a newspaper had three editions and each edition contained the same defamatory remark, then the original defamer could be liable for three different causes of action for defamation. [92]

2. Statute of Limitations for Defamation

The statute of limitations—or time limit—for a defamation lawsuit is one year after the alleged defamatory statement is published. [93] In general, the statute of limitations begins “when the defendant communicates the defamatory statement to a person other than the person being defamed.” [94] Also, in the case of a publicly made statement in a book or newspaper, the statute of limitations would begin “when the book or newspaper is first generally distributed to the public.” [95]

California courts may apply the “discovery rule” to delay the statute of limitations on a defamation claim if the defamatory comment was not made public, and instead was privately distributed and privately kept in a file. [96] A court may apply the discovery rule when it is equitable to do so because the defamatory statement is “hidden from view...in a personnel file that generally cannot be inspected by the plaintiff.” [97] For example, a California appeals court “determined that a teacher's cause of action for libel against a school principal did not accrue until the teacher knew or had reasonable cause to learn of the libelous material the principal had placed in her personnel file.” [98] The discovery rule appears to apply “only to ‘inherently unknowable’ publications.” [99] Therefore, the discovery rule would not apply to “libels published in books, magazines, and newspapers...,” because the plaintiff is presumed to know or charged with knowing that the defamatory comment was made public when it was published. [100] This is because the discovery rule cannot be used to extend the time for someone to sue for defamation after the harmful statement was already made public. [101]

III. Workplace Defamation and the Common-Interest Privilege Defense

A. The Common-Interest Privilege to a Defamation Claim

Under California law, the common-interest privilege is a communication that is made without malice between two interested people, or by two people that stand in relation to one another, that produces a reasonable ground to suppose an innocent motive for what has been communicated. [102] This includes when one person requests that another person give information to an interested party. [103]

1. Employee References

The common-interest privilege specifically includes a statement about a job applicant’s performance or qualifications for employment when the statement is “based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, one whom the employer reasonably believes is a prospective employer of the applicant.” [104] Malice in this context means that the statements were made with a motive of personal ill-will or hatred, or with reckless disregard for the truth. [105] Malice focuses upon the defendant’s state of mind, not their conduct. [106] Mere negligence, unintentional error, forgetfulness, or inadvertence is not enough to constitute malice. [107] When negligence amounts to a reckless disregard for the truth that reasonably implies a willful disregard for or avoidance of accuracy, then malice is demonstrated. [108]

2. Workplace Sexual Harassment

The common-interest privilege also specifically includes an employee’s sexual harassment complaint made—without malice and based upon credible evidence—to an employer. [109] The privilege for employee sexual harassment claims would also extend to employer statements made when communicating the employee’s sexual harassment claim to other interested persons, if made without malice. [110] This common-interest privilege also specifically “authorizes a current or former employer, or the employer's agent, to answer, without malice, whether or not the employer would rehire a current or former employee and whether the decision to not rehire is based upon the employer's determination that the former employee engaged in sexual harassment.” [111]

3. Common-Interest Statements

The common interest privilege protects communications made in good faith on a subject that the speaker and hearer share an “interest or duty.” [112] Interested persons under the common interest privilege are “defined as a communicator and a recipient with a common interest...” [113] The common interest privilege applies when a statement or comment is made primarily for the purpose of protecting or furthering the entitled commonly shared interest. [114] Also, to be protected as a privileged statement, any communications made under the common-interest privilege should occur during, or derive from, the relationship where the people share a common interest. [115]

4. Examples of Common-Interest Privilege

In the employment context, an employer’s statements to employees may be privileged because an employer and its employees have a common interest in protecting the workplace from abuse. [116] For instance, statements made in a commercial setting that relate “to the conduct of an employee have been held to fall squarely within the qualified privilege for communications to interested persons.” [117] In addition, a California court concluded that an employer may internally publish, to other employees, why a particular employee was terminated. [118] The court reasoned that the employer could publish why the employee was terminated because the employer had an “economic interest in clarifying its policies and preventing future abuses of those policies.” [119] Other instances where the common-interest privilege may exist include performance evaluations, communications surrounding past employee references, and internal investigations into misconduct or policy violations.

5. Common-Interest Privilege May Include Customer Communications

In some instances, California courts have also allowed the common interest privilege to apply to statements made to customers where the business and customer were protecting a shared common interest. For instance, in a case where an employee who was responsible for training the customer on how to use the business’s equipment was accused of sexually harassing the customer’s trainees, the court found that the statements made between the customer and business were privileged because they were motivated by a proper purpose to keep the workplace free of sexual harassment. [120]

On the other hand, if in a similar situation a court decided that statements between an employer and customer were made with malice because the defendant failed to investigate, knew the sexual harassment comments were inaccurate, or the statements were motivated by a desire to injure the employee’s reputational interest, then the common-interest privilege would not protect the statements.

B. The Actual Malice Exception to the Common-Interest Privilege

The common-interest privilege in the workplace can be defeated if a defamed employee can show that the employer acted with actual malice. [121] For instance, if the employer claims that the statements were made to an interested party to further a common interest, but the employee can show that the employer made those statements with actual malice, then the employer’s statements would not be protected from defamation. [122]

1. “Actual Malice” Defined

Actual malice is not inferred from the alleged defamatory statement or comment itself. [123] Instead, malice is a state of mind that is proven under the circumstances or the overall context in which an alleged defamatory statement is made. [124] The presence of actual malice can be inferred from factors such as failure to investigate, anger and hostility towards the plaintiff, or reliance on sources known to be unreliable or biased. [125] Thus, the presence of actual malice may be based on direct or circumstantial evidence. [126] A defendant acts with actual malice—the level of malice required to invalidate the common interest privilege—by: (1) having no reasonable basis for believing the statement was true and acting with disregard for the plaintiff’s rights, or (2) being “motivated by hatred or ill will towards the plaintiff.” [127]

2. False Statement and Malice

A person is said to know a statement was false or recklessly disregard whether a statement was true or false by acting “without good faith belief in its truth or without reasonable grounds for believing its truth....” [128] In addition, when determining whether a defendant recklessly disregarded the truth, it is important to focus on whether the defendant believed the statements to be accurate, “rather than the truth of the underlying statements themselves, that is relevant to the malice determination.” [129] Furthermore, malice “focuses upon the defendant's state of mind, not his [or her] conduct.” [130] For instance, the purposeful avoidance of the truth through inaction, such as a failure to investigate facts that could have confirmed the falsity of the statements, will support a finding of actual malice. [131]

3. Reckless Disregard for the Truth and Malice

Malice does not mean that the defendant was just acting negligently under the circumstances when a defamatory statement was made. [132] A mere oversight or making an “unintentional error, is not alone enough to constitute malice.” [133] Malice entails being more than merely sloppy, making an inadvertent act, or forgetting something. [134] Malice is shown only when the negligence amounts to recklessly or wantonly disregarding the truth, which reasonably implies that the defendant willfully disregarded or avoided determining whether a statement was accurate. [135] If the defendant lacked reasonable grounds for belief in the truth of the statement, then this is an indication of reckless disregard. [136] Reckless disregard for the truth also entails the implication of a defendant’s willful disregard for, or avoidance of, accuracy. [137] For example, actual malice could occur if a defendant republishes a communication while entertaining doubts about whether the statements made in that communication were accurate. [138]

4. Ill Will and Malice

In one California case, the court allowed an employee’s defamation lawsuit, otherwise protected by the common interest privilege, to continue because the employee presented enough evidence for a jury to conclude that the employer acted with actual malice. The employer accused the employee of forging delivery ticket details and lying about overtime hours. [139] The employee showed that the employer acted with actual malice because the employee’s supervisor frequently talked about the employee behind his back, insinuated that the employee was not a good employee, and was mad that the employee complained about a new policy. [140] In addition, the employee provided evidence that the supervisor never appropriately investigated whether he was the one that forged the delivery tickets; instead, the employer “only compared the delivery ticket at issue to two other delivery tickets for that patient, even though many tickets for that patient were available.” [141] Furthermore, the supervisor never asked the employee or the patient any questions about the forged date on the delivery ticket. [142] The court concluded that this evidence was sufficient for a jury to reasonably conclude the supervisor’s statements were motivated by ill will or that the supervisor lacked “reasonable grounds” to believe that her statements were true. [143]

It is important to note, however, that ill will toward a plaintiff, in itself, is not malice. “[A]ctual malice requires a link between the defendant's ill will and the defendant's awareness of the probable falsity of the challenged statements.” [144]

C. Proving a Defamation Case Against Employer

Before moving on to some specific workplace defamation examples, it is important to summarize how an employee would prove defamation against an employer.

1. Elements of a Defamation Lawsuit

First, the employee would need to prove that the employer more likely than not (1) published a (2) factually false statement that was (3) defamatory, (4) unprivileged, and (5) the false statement either naturally tended to injure the plaintiff or cause the plaintiff to suffer special damages. [145]

2. Employer’s Common-Interest Privilege

Second, if the defamatory workplace comment was protected under the common interest privilege, then the employee must, under the circumstances, show that the employer more likely than not acted with actual malice to defame the employee. [146]

3. Proving Employer’s Actual Malice

Lastly, to prove actual malice means that the employer, under the circumstances, either knew the statement was factually false or recklessly disregarded whether the statement was true or false, or the employer was motivated by ill will or hatred towards the employee. [147]

IV. Workplace Defamation Examples

A. Employer References and Defamation

Employers are frequently asked to provide references for their employees. To address the employers’ concerns over defamation lawsuits, the California statutory law was amended to encourage employers to communicate truthful information more freely. [148] In 1994, the California Legislature amended the common-interest privilege to specifically “apply to statements current or former employers make to prospective employers when the statements are based on credible evidence, made without malice.” [149] The Legislature’s primary goal was for reference information to freely flow between former, current, and prospective employers. [150] The privilege also protects employers against defamation claims arising from compelled self-published defamation (discussed below) as long as the statement is made without malice. [151]

While an employer’s communicated statements about a job applicant’s qualifications are conditionally protected under the common-interest privilege, employers can only make comments that are made without malice and based on credible evidence. [152] In general, an employer’s “[common-interest] privilege is lost if defendant has no reasonable grounds for believing his statements to be true.” [153] In other words, employers cannot discuss rumors or other things that are unreasonable for the employer to believe to be true. [154]

A California appeals court ruled that an employer’s false reference information was privileged because there were reasonable grounds to believe the statements, and no actual malice was shown. [155] In this case, the employee’s former employer mistakenly told a prospective employer that the employee left the company “because of ‘loss prevention issues,’ and his ‘rehire status’ was ‘unfavorable.’” [156] The court found in favor of the employer because the employer inadvertently made a “careless blunder.” [157] The employer made an inaccurate statement because the employer “was expecting an inquiry from a prospective employer on another former employee...” [158] The court ruled in the employer’s favor because malice is a state of mind that concentrates on what the speaker believes to be accurate under the circumstances, not the underlying truth of a statement. [159] Because the employee could not show that the former employer knew the statements were false, recklessly disregarded whether the statements were true, or that the statements were motivated by hate or ill will, the employee failed to show that the employer acted with actual malice.

In general, employers have a duty to accurately represent a former employee’s qualifications when that former employee poses an actual foreseeable risk of physical harm to others. [160] “[T]he writer of a letter of recommendation owes to third persons a duty not to misrepresent the facts in describing the qualifications and character of a former employee, if making these misrepresentations would present a substantial, foreseeable risk of physical injury to the third persons.” [161] For example, an employer would not want to praise how well a former employee performed job duties but completely fail to mention that the former employee physically or sexually assaulted other employees, customers, or students. [162] This would fail to warn the prospective employer about a real “substantial, foreseeable risk of physical injury to the third persons.” [163]

On the other hand, employers may not misrepresent information to prospective employers to prevent a former employee from obtaining employment because this could result in a misdemeanor penalty. [164] The California Labor Code specifically addresses this topic. An employer may not knowingly make false statements about a former employee that would prevent or hinder the former from obtaining employment. [165] An employer that violates this law may be subject to both civil liability and criminal penalties. [166] That said, nothing in the Labor Code prevents an employer from making “a truthful statement concerning the reason for the discharge of an employee or why an employee voluntarily left the service of the employer.” [167]

B. Employee Terminations and Self-Compelled Defamation

Employee terminations can lead to a workplace defamation lawsuit. One important example is self-compelled defamation, which means an employee is required to defame himself or herself. [168] Self-compelled defamation in a workplace context occurs when an employer fires an employee for a false and defamatory reason, and the employee is directly or indirectly required to inform future employers of this false and defamatory reason. [169] In other words, self-compelled defamation allows the publication element of a defamation to be satisfied if the employee is compelled to disclose the defamatory statements made by an employer. For a plaintiff to succeed in a claim of self-compelled defamation, they must demonstrate a strong compulsion to disclose the defamatory statement and that the employer could reasonably anticipate the self-publication. [170] For instance, an employee may be strongly compelled “to republish wrongful grounds for termination to prospective employers in order to explain away negative inferences that will be learned through investigation of the plaintiff's prior employment.” [171] However, for an employee to be strongly compelled to defame himself or herself, the employee must demonstrate that there was a “negative job reference” attributable to the employer that he or she had to explain. [172] For example, in a case about an employee theft, a California appeals court ruled that the plaintiff could not prove they were strongly compelled to share negative statements about the theft with future employers because there was no evidence that the employer gave a bad job reference regarding the theft. [173]

1. Exception to Publishing Requirement

To make a valid defamation claim, the general rule is that the defendant must publish the defamatory comment. But self-compelled defamation is an exception to this general rule. [174] For the self-compelled exception to apply, the defamed person must be strongly compelled to republish the defamatory statement, and the defamer must know that circumstances exist where the defamed person will be strongly compelled to defame himself or herself in the future. [175] In an employment context, this occurs when the employer informs the employee of the false and defamatory reason why the employee is being fired, and the employer knows that the employee will have to directly or indirectly repeat those statements to prospective employers. [176] For example, the former employee may have to share the false and defamatory reasons for termination if they need to explain a negative job reference to a potential employer by discussing what is in their personnel file. [177] Having to repeat the false and defamatory reason of why the employee was fired to prospective employers defames the employee’s reputational interest because it can significantly hinder or even prevent the employee’s future employment. [178] This is true because many job applications and interview processes ask an applicant if they have ever been terminated from employment, and an employee who answers “yes” will have to repeat that defamatory reason to the prospective employer. [179]

2. Self-Compelled Defamation Example

For example, in one California case, the employee was self-compelled to defame himself every time he applied for a new job with a prospective employer. [180] The employee sold insurance as a licensed broker-dealer for Allstate Insurance. [181] The employee got into a heated argument with his girlfriend and was arrested and charged with disorderly conduct. [182] Domestic violence charges were originally attached to the disorderly conduct charge but were later dropped. [183] After the employee “completed a domestic nonviolence diversion program, the disorderly conduct charge was dismissed.” [184] But before the disorderly conduct charge was dismissed, Allstate fired the employee “based on his arrest for a domestic violence offense and his participation in the diversion program. Allstate informed [the employee] it was discharging him for threatening behavior and/or acts of physical harm or violence to another person.” [185]

Allstate terminated the employee for false and defamatory reasons because the employee did not commit a domestic violence offense where he exhibited threatening behavior or acts of physical harm to another person. [186] The employer also published the false and defamatory reasons with the Financial Industry Regulatory Authority, where prospective employers in his industry could see this information. [187] Because of the false reason for the employee’s termination, the employee could not obtain another job in his industry. This was because the employee had to explain why he was terminated, which was viewed negatively by prospective employers. [188] The California appeals court found in favor of the employee because Allstate’s statements about domestic violence and threatening physical harm to another person were substantially false because the charge of “disorderly conduct does not require any physical violence or threat of physical violence....” [189] In other words, a person could not reasonably conclude that disorderly conduct by itself meant that the employee “engaged in physical harm or threatened physical harm.” [190] Therefore, the employer fired the employee for false and defamatory reasons, which compelled the employee to state these false and defamatory reasons to prospective employers. [191]

C. Employee Performance Reviews and Defamation

Because performance reviews—also known as performance evaluations—are opinion-based by nature, it can be more difficult for an employee to successfully claim defamation in this context. [192] Opinions are protected because “a statement of opinion cannot be false...,” and a defendant must publish a factually false statement to be liable for defamation. [193] The word “evaluation” means to examine or judge the degree, quality, significance, or condition of something else, which is very opinion based. [194] Employers use performance reviews “as a management tool for examining, appraising, judging and documenting the employee's performance.” [195] In addition, “the performance review is a vehicle for informing the employee of what management expects, how the employee measures up, and what he or she needs to do to obtain wage increases, promotions, or other recognition. Thus, the primary recipient and beneficiary of the communication is the employee.” [196]

Employers generally cannot commit defamation with an employee performance review unless the “performance evaluation falsely accuses an employee of criminal conduct, lack of integrity, dishonesty, incompetence or reprehensible personal characteristics or behavior...” [197] This is true even when the employer’s perceptions about the “employee's efforts, attitude, performance, potential or worth to the enterprise are objectively wrong and cannot be supported by reference to concrete, provable facts.” [198]

1. Example of Defamation Related to Employment Review

In a California case, an employee sued his employer for libel because he disagreed with the employer’s criticisms in a 14-page performance evaluation. [199] Here are some of the alleged defamatory remarks in the performance review in this case:

[the employee] had not increased his skill in project definition and control; was not pulling his weight in meeting various sales objectives; appeared to lack concern for management’s need for information; had weak knowledge of project management and process control; showed lack of direction, inflexibility and lack of dependability causing unnecessary delays in projects and finger-pointing; had a productivity perceived as low due to his lack of personal ownership of tasks; displayed questionable judgment in pursing personal vindication concerning behavioral problems and in breaching confidentiality of personnel matters between him and [employee’s manager]; did not extend himself by giving a helping hand or pitching in; projected an attitude of if it's not my job, it's your problem; displayed a lack of attention to tasks and overall communication with the team; and was the subject of a tremendous amount of negative feedback. [200]

Additionally, the employer noted that the employee had been “the subject of some third-party complaints,” “was not carrying his weight,” exhibited a “negative attitude in dealing with others,” lacked “direction in his project activities,” and was “unwilling to take responsibility for the projects he oversaw.” [201]

Overall, the court ruled in favor of the employer because “even if the comments were objectively unjustified or made in bad faith, they could not provide a legitimate basis for [the employee’s] libel claim because they were statements of opinion, not false statements of fact.” [202]

D. Employer Investigations into Employee Misconduct and Defamation

Statements made during an employer’s investigation are often protected by a the common-interest privilege, especially when the employer has a duty to investigate any charges made and the statements are made to persons responsible for carrying out the investigations. However, employer investigations can create scenarios where an employer can defame an employee that has allegedly done something inappropriate or criminal. Because statements made internally within an organization fall under the common-interest privilege, an employee will most likely have to prove that the employer made those comments with actual malice, as discussed above. [203] Failure to conduct a thorough and objective investigation alone is not enough to establish defamation, but purposeful avoidance of the truth or disregard of contradictory evidence can indicate actual malice. [204]

1. Internal Statements

For instance, if an employer is investigating discrepancies in an employee’s timecard or equipment service log, statements made from employee to employee, supervisor to employee, and company executive to manager would be protected by the common-interest privilege. [205] These statements made within an organization involve a shared interest “designed to insure honest and accurate records....” [206]

2. External Statements

By contrast, statements made to external stakeholders, customers, suppliers, or insurers, for example, may or may not be protected under the common-interest privilege. For an employer’s statement to be protected under the common-interest privilege, the employer and the message recipient must share a common interest, and the statement must be “reasonably calculated to further that interest.” [207]

If a court decides as a matter of law that statements made to external stakeholders during an employee misconduct investigation were not privileged, then the employee needs to prove the remaining four elements of defamation. These remaining four elements would be the employer (1) published a (2) factually false statement that was (3) defamatory, and (4) the false statement either naturally tended to injure the plaintiff or caused the plaintiff to suffer actual damages. [208]

In addition, whether an employer’s investigatory statements are privileged or not, an employer could increase its chances of defaming an employee if the employer lacked a reasonable basis for believing the misconduct charge to be true, or the employer failed to conduct a reasonable investigation into the alleged misconduct. [209] For instance, an employer could be found to have acted with actual malice “when the investigation was grossly inadequate under the circumstances.” [210]

E. Examples of Alleged Defamation from an Employer Investigation

To understand how an employee might be defamed from an alleged misconduct investigation, it is helpful to consider two contrasting cases, one where the court found for the employee and one where the court found against the employee. Both cases hinge on the common-interest privilege, but with different outcomes. Note that the civil courts’ findings on the employers’ defamation are independent of the criminal courts’ findings on the employees’ guilt in these cases.

1. Court Finds in Favor of the Employee

In one California case, the Ninth Circuit Court of Appeals found in favor of the employee. The employer alleged that the employee stole or embezzled money from the company. [211] During the employer’s misconduct investigation, the employer set out to determine if a specific employee was to blame for the discrepancies in the accounting ledger. [212] During the investigation, the employer called some of the employee’s customers to investigate the discrepancies. [213] When the customers asked the employer why it wanted to see the sales receipts in question, the employer responded in an unnecessary way. [214] The employer told the customers, among other things, that the alleged employee was “short” in money from his sales accounts, or the employee seemed to have taken some of the employer’s money before leaving for vacation, and the company wanted to know “just how much he had taken.” [215] About one year after the employer investigated the employee, “irregularities were discovered in the cashier's accounts, and he was charged with embezzlement and jailed.” [216]

a) No Common Interest Between Employer and Third Party

The employer in this case argued that the statements made to customers were protected under the common-interest privilege, but the appeals court found that the employer had not shown how the business and the customer shared a common interest. [217] The court reasoned that the employer had no duty and was not obligated to tell customers that the specific employee in question had failed to turn in money to the company. [218] The court further noted that it was not necessary for the employer to say what it did to the customers, nor was it in the customer’s interest to learn what the employer thought of the specific employee in question. [219]

b) Employer’s Statement About Employee Did Not Protect Third-Party Interest

In this case, the common interest privilege did not apply because the employer and the customer did not share a common interest—the customer had already paid for and received the merchandise. [220] This meant that it would have been inconceivable for the court to believe that the employer was protecting the customer from a common interest of being defrauded, for example, because the employer was the only one claiming to be defrauded. Lastly, the court stated that when “a person is employed to sell merchandise and collect...and turn in his collections to his employer, to charge that he is ‘short’ is to impute dishonesty.” [221] The appeals court found in favor of the employee and affirmed the trial court’s defamation verdict for the employee. [222] Ultimately, the employer could have more objectively and unbiasedly investigated the employee without telling customers that he stole money. For example, if the customers asked why the employer wanted to see the sales receipts, the employer could have simply indicated a need to verify the accounting ledger for all sales during a specific period. This way, no single employee would have been identified.

2. Court Finds in Favor of the Employer

In a contrasting case, the court found against the employee in his defamation case. [223] In this case, an employer was investigating its body shop manager for numerous work-record inconsistencies, missing repair orders, various fictitious repair order names, inaccurate time logs, “and unauthorized work which was performed on company time and at company expense.” [224] The employer reported the employee to the police, and after the police investigated the inconsistencies, the employee was charged with embezzlement and grand theft. [225] The grand theft charge was dropped, and the employee was acquitted by a jury on the remaining charge of embezzlement. [226]

a) Common Interest Between Employer and Third Party

The central issue of the former employee’s defamation lawsuit were the statements that the employer made to two different insurance adjusters who referred business to the employer. [227] The employee claimed that the employer told the insurance adjusters that the employee committed the crime of theft. [228] The employer argued that the statements were protected by the common-interest privilege and the employee could not show that the employer made that statement with actual malice. [229] The court agreed with the employer on both claims. The court reasoned that the common-interest privilege applied because the employee was the auto body shop manager that oversaw the work and records associated with the vehicle repairs paid by the insurance companies. [230]

b) Employer’s Statement About Employee Protects Third-Party’s Interest

The court stated that if the employer believed the employee was engaging in criminal activity, it was important for the employer to bring this fact to the insurance adjusters’ attention. [231] The employer was not only protecting its own interests, but also the interests of the insurance adjusters who referred business to the employer. [232] In other words, the employer and the insurance adjusters shared a common interest in not being defrauded. Furthermore, the court reasoned that alerting the insurance adjusters that the auto body shop manager might be defrauding the employer was “reasonably calculated to protect or further a common interest of both the communicator and the recipient.” [233]

In addition, the court mentioned that the statement to the insurance adjusters that the employee was a thief was the employer’s conclusion after investigating “what appeared to be criminal conduct on the part of [the employee].” [234] Lastly, the employee failed to show any evidence that the employer acted with malice, such as showing the employer knew the statement was false, recklessly disregarded the statement’s truth, or harbored an ill will or hatred toward the employee. [235] The court found in favor of the employer by determining that the statement, the employee “was a thief,” made to the insurance adjusters was subject to the common-interest privilege. [236]

V. Employer’s Vicarious Liability for Workplace Defamation

Under California law, employers may be held liable for defamatory statements made by its employees. [237] Businesses—for example, corporations or LLCs—can only act through their agents or employees, because “[a] corporation could not, itself, slander or libel a person; a corporation can act only through agents.” [238] For instance, a business could be liable for defamation if its supervisors or other employees wrongly state that another employee falsified timecards. [239] There are many different scenarios where an employer could be liable for the defamatory remarks of its managers or employees because California broadly imposes vicarious liability on employers. [240] But for an employer to be vicariously liable for defamatory statements, the employee must be acting within his or her scope of employment or performing “duties in the course of transacting the business of the corporation.” [241] Additionally, an employer cannot be held vicariously liable if the employee who made the defamatory statements has obtained a defense judgment on the merits of a defamation claim. In other words, if the employee is found not liable for defamation, the employer cannot be held liable either. [242]

A. Employee Acting Within Scope of Employment

Whether an employee is acting in his or her scope of employment ordinarily depends on the facts of each case. [243] Generally, “employees’ defamatory statements made at work about matters relating to work [are] within the scope of their employment.” [244] In addition, statements are made within the scope of employment if those statements can be fairly regarded as typical of or broadly incidental to the employer’s business. [245] Overall, employers can be liable for an employee’s conduct when that conduct is foreseeable, or “not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer’s business.” [246] For instance, if an employee, while performing job duties for the employer, calls a third-party workers’ compensation administrator and says that another employee is a “pole dancer,” the employer may be found vicariously liable to the defamed employee for those defamatory remarks. [247]

B. Employer Liability Broadly Imposed

In addition, an employer may be liable for defamatory statements even if the employer did not know about the statements or approve of the statements before or after the statements were made. [248] Furthermore, the employer may be liable for its employees’ defamatory statements when the statements were not made to benefit the employer. [249] Lastly, an employer may be liable when an employee combines their own personal business with the employer’s business, or attends “to both at substantially the same time..., unless it clearly appears that neither directly nor indirectly could he have been serving his employer.” [250]

C. Employee’s Ill Will May Take Statement Outside Scope of Employment

This does not mean that the employer will be liable for everything that an employee does or says during working hours. [251] For instance, “an employer will not be held vicariously liable for an employee’s malicious or tortious conduct if the employee substantially deviates from the employment duties for personal purposes.” [252] This means that an employer would most likely not be liable for an employee’s defamatory statements that were personally motivated by ill will and were unconnected to that employee’s job duties, tasks, or scope of employment. [253]

D. Outside Scope of Employment

Defamatory statements made by an employee that are outside the scope of employment typically involve actions that are personal in nature and not related to the employee’s job duties. Hypothetically speaking, if an employee calls a neighbor and makes a defamatory remark about another neighbor while working for the employer, the employer should not be liable to the third-party neighbor because the employee was personally motivated by ill will and the phone call was not connected to the employee’s job duties, tasks, or scope of employment. [254] Similarly, if one coworker defames another coworker while playing golf on a lunch break, the employer will most likely not be vicariously liable to the defamed employee because by playing golf on a lunch break, the employees substantially deviated from their employment duties for personal purposes. [255]

E. Within Scope of Employment

By contrast, if one employee acts with personal malice to defame another employee while at the office performing job duties, tasks, or otherwise acting within the scope of employment, the employer will most likely be vicariously liable to the defamed employee. [256] Even if the employee's actions are willful, malicious, or exceed their express authority, the employer may still be held liable if the actions were connected to the employee's work. [257] This can be true because “there is unfortunately nothing ‘unusual or startling’ about personal hostility, backbiting, resentment of another's success, false rumors, and malicious gossip in the workplace.” [258] In other words, it would be fair to include the losses resulting from the employee’s defamatory remarks while at work and acting within the scope of employment, since the losses foreseeably result from the conduct of the employer’s enterprise and are attributable to the employer “as a cost of doing business.” [259]

VI. Conclusion

A plaintiff in a workplace defamation case must prove the five elements of a defamation case. Workplace defamation cases often arise from statements made during employee referrals, performance evaluations, and internal investigations. If the workplace statements are protected by the common-interest privilege, the employee will have to show that the employer acted with actual malice to defame the employee. An employee can show that the employer acted with actual malice by showing that the employer either knew the statement was factually false, the employer recklessly disregarded whether the statement was true, or the employer was motivated by ill will or hatred toward the employee. Lastly, an employer can be vicariously liable for its employee’s defamatory statements when an employee, acting within the scope of employment, defames another employee.