Many employers have probably never considered the possibility that a supervisor's negative performance review of another employee, leading to the employee's termination but never circulated outside the office, could support a defamation claim. After all, most employees are presumed to be employed at-will, leaving their employers free to terminate them for any reason, or for no reason at all.
Negative performance reviews are quite common in the workplace, and courts generally refuse to sit as super-personnel departments, re-examining every termination decision made by employers. But one recent decision by an Illinois court reminds us that negative performance reviews and other internal memorandums can lead to liability for employers in extreme cases.
In this case, the court affirmed a jury verdict in favor of a terminated employee, against his former employer and two of his former supervisors, on a defamation claim based on internal communications related to his performance review.
The employee, Daniel Popko, was an attorney who had received uniformly good reviews from his employer until July 2, 1999. On that date, Popko's direct supervisor gave Popko a substantially lower evaluation. The negative review led to an altercation in which Popko used profanity.
The supervisor recommended to his manager that Popko be terminated for the outburst. The manager agreed and reported the incident to the company's vice president. The manager then prepared a written memorandum, which set forth several instances showing a "pattern of unacceptable conduct" by Popko and delivered it to the vice president. Popko was terminated shortly thereafter for "poor conduct." He sued the company, his direct supervisor and his manager for defamation. The jury later found in favor of Popko and awarded punitive damages.
On appeal, the company argued that the manager's memo could not support a defamation claim, because it was an internal communication (or, the corporation "talking to itself") and not a publication for defamation purposes. The court disagreed. While recognizing that courts were split on the issue, the court stated that Illinois "recognize(s) that communication within a corporate environment may constitute publication for defamation purposes." This is also the legal position of some Florida courts.
Thus, in Florida, there is no absolute bar to defamation or libel claims based on internal corporate communications that are kept entirely within the employer's walls. Instead, employers here must normally rely on the "qualified privilege" protecting certain communications for policy reasons, such as those made when an employer investigates the conduct of its employees.
But this defense is not absolute. First, the company has the burden of showing that a qualified privilege attaches to the communication. Second, the employee may still recover by showing that the employer abused the privilege.
In the Popko case, the jury found the company abused this qualified privilege by publishing a memorandum without confirming the accuracy of its allegations or even attempting to do so. Additionally, as is necessary to establish a defamation claim, the employee showed the memorandum was false -- Popko was not fired for performance reasons, but for his behavior during the July 2 review.
The lesson from this case is that even internal communications can serve as the basis for a defamation claim, and as should be the case with all discipline or discharge memorandums, employers should strive to be truthful. Truth is an absolute defense to a defamation claim.
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