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Consumer Reports

Detective work may reveal an ex-boss badmouthing you | (KRT) Looking for a job and getting turned away time and again? It might not be your fault.

It could be that former bosses are badmouthing you.

Take the case of one woman who left her company with good reviews only to find that one of her references kept telling prospective employers "it's so sad she's dyslexic" - even though she wasn't.

Another job seeker learned his old superior was telling callers that the man kept a mistress and apartment in Hong Kong. Interesting story, but totally inappropriate.

Both frustrated job seekers only found out about the smear campaigns when they hired a reference-checking company that posed as a prospective employer.

Such companies make up a fast-growing niche that has exploded during the current layoff-heavy economic downturn.

"We generally grow about 15 percent a year. But anytime the economy experiences a problem like this, for every 1 percent of unemployment, we see an increase of 5 percent in business," said Guy Fowler, vice president of operations for one of the biggest companies in the field, Documented Reference Check Inc. of Diamond Bar, Calif.

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What job seekers do with the information from Fowler's company and other reference-checking firms is up to them. Action can range from informal warnings to lawsuits.

"Some of these services use a court reporter who transcribes what they've been told so it can be used as the basis of a defamation action," said Scott Witlin, an employment law specialist and Los Angeles-based partner with Proskauer Rose LLP, a New York law firm.

The increased interest in background checks isn't limited to people looking for work.

Sometimes the reference check companies are hired to do background investigations on employees already on the job. Often those checks are prompted by lawsuits accusing companies of not being thorough enough in their initial background inquiries.

"We've had quite a few attorneys calling us to testify in the last few months on whether the background check was accurate," said Laurie Jones, president and co-owner of Employment Practices Solutions Inc. in Southlake, Texas.

"For instance, there's a case where an employee allegedly raped a tenant at an apartment complex. In the lawsuit, they said they shouldn't have hired him because he had a criminal history."

A poor economy aggravates the situation because fewer jobs mean more rejections, Jones said.

"You turn down more people, and they're going to be upset and look for someone to blame," she said. "We are seeing more lawsuits right now because more people are being turned down for jobs than previously."

Heidi Allison, a partner in the Michigan-based reference checking company Allison & Taylor Inc., marvels at how angry some bosses get at former employees.

In one memorable call, Allison said, the reference she was checking actually asked, "What does that nightmare want?"

In another case, the boss was still nursing a years-old grudge over being denied a sabbatical that went to the former employee. In retaliation, he would tell prospective employers that his former subordinate was "incompetent."

"The boss was so jealous about losing out to him for a sabbatical that he gave him bad references," said Allison. "People are so mean."

Lawsuits involving references - filed by both employees seeking jobs and co-workers - are on the rise nationwide, said Fowler of Documented Reference Check.

"We do research every year, and we publish our findings on which state you'll most likely get a negative reference. We find that Texas is in the top three quite often," he said.

That's because Texas employers are "straight shooters, and they shoot from the hip," Fowler added. "And employers are allowed to give negative references based on `qualified privilege.'"

Texas courts have recognized "qualified privilege," allowing an employer to pass along information that is "true and accurate." The Texas Legislature also has passed a law that protects employers from being sued for giving references.

But Witlin, the employment attorney, said it usually isn't worth the potential trouble to give a bad reference. He advises clients to release just the bare minimum of information.

"As an employer, there is no direct benefit to you from giving out references," he said. "When weighed against the potential cost, in many cases, it's just not worth it. It's a surprising, unfortunate side effect of living in a litigious society." he said.

Jonathan Wilson, chairman of the labor and employment law section of Dallas-based Haynes and Boone LLP, agrees.

"It's created an unfortunate situation for employers and employees alike," he said. "Good employees that used to be able to count on a good reference find that their employers don't give them out or give neutral references."

Reference investigators, on the other hand, blame employers for the rise in lawsuits because they give out information they shouldn't.

"We use certified court reporters, so what are they going to do, stutter and say we didn't say that?" Fowler said. "They may as well settle out of court. The attorneys pretty much hate us."

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© 2003, The Dallas Morning News Distributed by Knight Ridder/Tribune Information Services