Solving the Employee Reference Problem: Lessons from the German Experience

Abstract

In this article we examine the problem of declining employer references in the American economy. We argue that the problem is not that employers inordinately fear potential slander and libel liability for giving references, but that they have no assurance of benefits from reciprocal references in exchange for taking any risk or suffering any cost in giving references. We provide a comparative legal analysis and argue that the United States might benefit from adopting an employer letter of recommendation system similar to that currently used in Germany.

Keywords: references, libel, slander

JEL Classification: K31, L21, M12, P51