HR Management & Compliance

Defamation Claims: Employer Dodges Lawsuit By Employee Wrongfully Accused Of Theft; 3 Defensive Strategies

Whenever you discipline or terminate an employee for misconduct, you open yourself up to the possibility of a defamation lawsuit if you say something negative about the person to other employees. But as a recent case shows, exercising caution in internal discussions about a worker’s wrongdoing can help keep you out of trouble, or provide a defense if you’re sued. The new case involved a Nordstrom employee fired after being falsely accused of theft by a customer. Even though the employer told other workers about the reasons for the discharge, it was still able to fend off the employee’s defamation claims. We’ll examine the case and offer strategies for avoiding liability for what you say about your discharge decisions.

Employee Fired For Stealing Watch

Problems started when Ofik Keshishian, a longtime Nordstrom seamstress in Los Angeles, agreed to alter a non-Nordstrom garment at a customer’s home because the retailer frowned on doing such work at the store. After the job was completed, the customer called the store, accused Keshishian of stealing her $12,000 watch and demanded that Nordstrom pay for it.The store manager and human resource manager fired Keshishian. A few days after the discharge, the customer called back and said she had found her watch. But Keshishian wasn’t rehired. And Keshishian claimed, to make matters worse, the store manager had spread the customer’s false theft accusations throughout the workplace.

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Employer Hit With Defamation Lawsuit

Keshishian sued Nordstrom for defamation. The retailer denied the charges, arguing that it wasn’t liable because it had a right to inform others in the company about why Keshishian had been terminated. Nordstrom also claimed that, in any event, it had a good-faith belief that the customer’s accusations were true.The California Court of Appeal sided with Nordstrom. It found the company’s statements were protected by the so-called “common-interest privilege.” Under this rule, you can talk about an employee to someone who has a legitimate interest in the information, provided your remarks are not made with malice, which is defined as ill will, lack of reasonable ground for believing the statement to be true or lack of good-faith belief the statement is true. The court found no evidence Nordstrom acted with malice, citing the company’s belief, based on the customer’s allegations, that Keshishian had stolen the watch. The court threw out the lawsuit, and now the California Supreme Court has rejected Keshishian’s request to review the case.

3 Strategies For Avoiding Defamation Claims

The key to preventing defamation lawsuits is being careful with what you say to others in your organization about an employee who has been disciplined or discharged. Here are some guidelines to keep in mind:


  1. Limit your discussions. Talk about the reasons for your actions only with people in your company who have a legitimate need to know the details, such as the worker’s supervisor.


  2. Caution supervisors. Make sure supervisors know they should not talk about personnel matters with an employee’s co-workers. Also remind them that, in some cases, they can be personally liable for repeating defamatory comments.


  3. Stick to the truth. The best defense to any defamation claim is that what you said was true, so it’s critical that facts not be exaggerated or embellished and that you have objective reasons for the discipline or termination.