IT'S REVIEW SEASON - BE TRUTHFUL IN THE CRITIQUE YOU GIVE YOUR EMPLOYEES IN THEIR PERFORMANCE REVIEWS OR RUN THE RISK OF A DEFAMATION CLAIM
The Virginia Supreme Court has held that a false statement of fact made maliciously in a performance review may be subject to claims of defamation. In Raytheon Tech. Servs. Co. v. Hyland, 641 S.E.2d 84, 273 Va. 292 (Va. 2007), the plaintiff, who had been an employee of Raytheon for over 21 years, received a performance evaluation that contained 5 negative comments and thereafter the employee was terminated. The employee sued the employer for defamation and the jury returned a verdict of $1.5 million in compensatory damages and $2 million punitive damages.
On appeal, the Virginia Supreme Court held that, even though performance reviews normally contain statements that are pure expressions of opinions made by the evaluator and thus not actionable, it does not render the evaluator immune from actionable claims of defamation.
In its decision, the Court analyzed the 5 statements made in the performance review to determine whether they were actionable statements of fact or non-actionable statements of pure opinion. The Court ultimately found that only 2 of the 5 statements were actionable as defamation and returned the case to the trial court for a new trial .
The first statement that the Court found to be actionable states as follows:
"Cynthia and her team met their cash goals, but were significantly off plan on all other financial targets including Bookings by 25 percent, Sales by 11.5 percent, and Profit by 24 percent."
The Court held that whether the business unit missed its goals by the stated percentages is a fact that may be proved true or false. Moreover, the Court held that the word "significantly" in this context is identified by percentages and not merely the opinion of the writer.
The other statement that was found to be actionable states as follows:
"Cynthia lead (sic) RTSC in the protest of FAA's evaluation selection process for the TSSC contract and through a difficult procumbent for the TSA, both of which demanded her constant attention. These visible losses created significant gaps in our strategic plans and in her business unit financial performance."
The Court stated that whether the plaintiff led the protest of TSSC contract award and the TSA procurement was responsible for "these visible losses" is susceptible to empirical proof. Similarly whether losses from those projects created gaps in the company's plans and the financial performance of business units which she oversaw can be established through the production of evidence. Moreover, the Court stated that, although the word "significant" may be a matter of opinion, the operative part of the statement involves whether plaintiff was responsible for certain losses, not their size, thus making it a statement of fact not opinion which could be the basis for a claim of defamation.
In conclusion, it is apparent that in Virginia false factual statements in a performance review evaluation can be actionable as defamation. As such, employers are advised to be precise, accurate and truthful in their critique of their employees during the performance review process.
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Jackson & Campbell’s Employment Law Practice Group can advise companies on best practices with regard to employee performance reviews to protect employers from potential liability that may arise as a result of this decision and provide counsel on other related matters.
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