Employment & Labor Insider

The Pennsylvania Department of Insurance will be going to trial in a retaliation case involving reference information it provided for a former employee.

Did the Department really mess up, or is this the case of a court's 20-20 hindsight? You decide. Here are the allegations:

Cherie Leese, an employee for the Department, made an internal allegation of sexual harassment and filed a charge with the Pennsylvania Human Relations Commission alleging that she had been retaliated against for making the harassment complaint.

Ms. Leese and the Department settled, and part of the deal was that Ms. Leese would resign. The agreement said (among other things) that Ms. Leese would not seek reemployment with the Department or with any other agency under the jurisdiction of the Governor of Pennsylvania. (The prohibited agencies were not specified in the agreement.)

However, Ms. Leese was free to apply for jobs with "any independent state agency outside the Governor's jurisdiction," and the Department agreed not to interfere with those efforts. The parties also agreed not to disparage each other, and the agreement specifically said that the non-disparagement clause applied to employment references for Ms. Leese.

Pretty standard stuff.

Then the Department got back to the office . . .

Departmental personnel records had codes for terminated employees, including one for "voluntary resignation with notice." In this case, the Director of Human Resources was instructed to enter an unusual code for Ms. Leese. The code, which the DHR did not remember had ever been used before, meant "voluntary resignation contact former agency." The Department said it had to use this code so that it could monitor whether Ms. Leese was applying for jobs with other state agencies within the Governor's jurisdiction. Other state agencies could see the code assigned to Ms. Leese.

Ms. Leese applied for jobs with a number of state agencies and private sector employers. The state agencies included at least three that were not under the Governor's jurisdiction. (It didn't seem to be clear to anyone which state agencies were under the Governor's jurisdiction and which were not. According to Ms. Leese, even the state government website was wrong.)

Meanwhile, the DHR -- instead of handling reference requests about Ms. Leese herself -- referred requests about Ms. Leese to the attorney for the Department. (This sounds like a huge red flag, but apparently it was normal for the attorney to handle reference requests.)

When he received a reference request about Ms. Leese, the attorney asked whether the call was on behalf of a state agency within the jurisdiction of the Governor. If the caller said no, the attorney would send an email to the caller saying, "I can make no comment relating to Ms. Leese's separation."

If the caller said yes, apparently the attorney was more forthcoming about Ms. Leese. And, maybe, not in such a good way.

The big problem was that at least three independent state agencies actually were suspicious of the code assigned to Ms. Leese. According to the court, one agency noted,

not allowed to consider . . . unusual code."

Another initially described her as a strong candidate, but that was followed by the notation,

Red Flags during [. . .] review. Not hiring."

And the attorney shared with a third independent agency more detailed information about Ms. Leese's history, as if the agency were under the jurisdiction of the Governor.

Needless to say, Ms. Leese didn't get a job. She sued under Title VII, claiming that the Department retaliated against her for her sexual harassment and PHRC complaints. The Department moved for summary judgment.

According to the Department, it had the right to monitor whether Ms. Leese was applying for jobs with other agencies under the jurisdiction of the governor. It also said that the DHR and attorney had both consulted higher authorities in the Department, who had advised them to use the code. But the court wasn't buying it -- at least, not at the summary judgment stage.

So, what do you think?

What this employer did right

• Had a reasonably specific settlement agreement that prohibited the employee from seeking reemployment that was not overbroad.
• Consulted with General Counsel and other higher-ups about how to avoid an inadvertent "rehire" while complying with the agreement.
• Provided no information to prospective employers with whom it perceived Ms. Leese was free to apply.

What this employer (arguably) did wrong

• Didn't include in the agreement, or in an exhibit, a list of the specific employers who were off-limits. As a result, "mistakes were made."
• Used a weird reference code that, apparently, was seen by some prospective employers who shouldn't have seen it.
• Used a weird reference code that was perceived by some prospective employers as a "red flag."
• Rather than giving out the former employee's dates of employment and positions held -- which would seem perfectly normal -- declined to comment at all, which seems abnormal.
• Might have shared negative information with at least one prospective employer with whom the former employee was entitled to apply.

To me, the biggest (alleged) mistake was the employer's failure to consider the "gestalt" of its reference process as applied to Ms. Leese. No single thing that the Department did was that bad in itself -- referring all requests to the attorney (assuming that was their standard practice), asking whether the prospective employer was a state agency under the Governor's jurisdiction, and if not, sending an email of "no comment" -- but the combination of these things really didn't look very good.

I think a better process would have been for the Department to (1) create a list of the state agencies that were off-limits to Ms. Leese, (2) ask for the identity of all prospective employers -- wouldn't it have needed that information anyway? -- which would have allowed it to determine whether Ms. Leese was entitled to apply there or not, (3) in all cases, provide a neutral reference consisting of dates of employment and positions held, and (4) after determining that a prospective employer was off-limits, follow up with that employer and disclose whatever additional information it was allowed to disclose.

One more point -- sending reference requests through an attorney really does look bad, even if it isn't. The other state agencies under the Governor's jurisdiction may have known this was standard practice, but they wouldn't have been hiring Ms. Leese anyway. To outsiders, who are probably accustomed to having reference requests routed to the Human Resources Department, it must have looked verrrrrry suspicious. And they're the ones who might have hired Ms. Leese. 

So the case goes to the jury.

Oh, well. Maybe the Department and Ms. Leese will settle -- again.