When a job applicant applies or interviews for a new job the prospective employer would often like to speak to the applicant’s current or former employer. But if the employee is still employed the prospective employer will likely cause the applicant to be fired or terminated by contacting the current employer and informing them the applicant is applying for a new job. A prospective employer interviewing an applicant might also expose itself to liability by contacting the applicant’s current employer—as well as damaging its reputation and ability to attract other qualified job applicants.

But a prospective employer may contact the former employer (or other reference) of an applicant. And the former employer (or reference person) may freely state truthful facts about the applicant—or state the former employer or reference’s opinion of the applicant—but cannot make false or untruthful statements of fact about the applicant. If a former employer or applicant makes false or untruthful statements of fact—statements that are provably false—the former employer or reference may be subject to liability for defamation (slander or libel).

In South Dakota, as in many states, there is a general understanding that prospective employers should exercise caution when contacting an applicant's current employer due to the potential risk of causing the applicant to lose their job. This is not regulated by a specific statute in South Dakota, but it is a common professional courtesy and a matter of privacy concern. However, prospective employers are permitted to contact an applicant's former employers or references. When doing so, the former employer or reference is allowed to share truthful facts and opinions about the applicant. South Dakota law, similar to the law in other jurisdictions, protects individuals from defamation, which includes both slander (spoken false statements) and libel (written false statements). If a former employer or reference makes statements about an applicant that are both false and damaging to the applicant's reputation, they could be held liable for defamation. It is important for all parties to ensure that any information shared during the reference or background check process is accurate and truthful to avoid legal consequences.