How to Handle a Defamation Claim


One of the most serious legal issues you or your business could face is a claim of defamation from one of your employees. These charges can be extremely costly to your business, and you need a careful, trained hand to defend against them. Small business owners need to be aware of what constitutes a defamation claim, including libel and slander, and how to handle these claims.

What is Defamation?

When someone makes a claim of defamation, the charge is that the defendant—in small business cases, the employer—made a statement about the claimant, the employee, which damaged the employee’s reputation unfairly. There are generally three components of an employee’s claim of defamation against an employer:

  1. The employer made a false statement.
  2. The false statement was communicated to a third party, beyond just the employer and the employee in question.
  3. The false statement caused damage to the employee.

The broad category of defamation is divided into two main branches of communication, depending on how the false statement was made. If the statement was spoken, it is considered slander; if the statement was published in writing or pictures, then it is libel.

Steps to Take

If an employee brings a defamation claim against you, get help from a legal expert. Legal fees are costly, but defamation charges can be quite complex, and require more expertise than you probably have available in your human resources department. A knowledgeable lawyer will better be able to defend you and your business, saving you money in the long run.

Preventing Defamation Claims

There is a wide range of possible ways to defend yourself from defamation claims, but the best protection you can have is the truth. Because the first requirement of a defamation claim is someone making a false statement, the best defense is to speak only true statements, or at least statements that you can reasonably believe to be true based on how reliable your source is. The truth protects you from defamation charges, whether libel or slander.

Relying on the truth is effective, but can still lead to costly legal battles even if you win if an employee wants to pursue the claim. Small business owners should make it a best practice to be very careful about what they say and how they say it. The same holds true for other employees, as well. You ought to include a company policy in your employee handbook about defamatory speech, making it clear that it has no place in your business environment. Business practices such as these will help with risk management, preventing any claims of defamation and protecting your business.

Have you ever had to deal with a defamation claim?

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Rick Gossett

Rick Gossett has been COO of Tarkenton Companies for more than 20 years and is an expert in business operations, responsible for business software development, unique partnerships, business educational content, consulting, and more. Rick was the originator of Tarkenton Companies’ consulting services and, initially, personally answered every question. Before joining Tarkenton Companies, Rick owned and operated a private practice as a CPA. Prior to that, he was a Senior Manager at Pannell Kerr Foster in tax and audit, as well as Principal in Ernst & Young’s small business advisory group.