Can You Be Defamed At Work By Your Managers Or Co-Workers?

Defamation consists of false written or oral statements that tend to injure a person’s reputation and good name.  But how does that apply to managers or co-workers in the employment context?  Can comments by a manager or co-worker lead to liability for defamation or some sort of business practices issue?  The Iowa Supreme Court has never answered that question, but the Iowa Court of Appeals did recently in Newell v. JDS Holdings.

The Newell court decided that inter-corporate communications can, in limited circumstances, form the basis for a defamation claim.  The court thought that a defamatory statement made to one’s employer can harm one’s business reputation with the employer, whether the defamer is a co-worker or is instead removed from the employment relationship.  But the Newell court also ruled that inter-office communications are entitled to a limited privilege under certain circumstances, a privilege that, if applicable, protects the co-worker or manager from liability for defamation.

Under Newell, there’s now a two-stage inquiry under Iowa law in inter-corporate defamation cases.  First, is the statement entitled to protection under the limited privilege?  Second, if the statement is entitled to the limited privilege, has the defendant somehow abused the privilege and forfeited the immunity that the privilege would otherwise provide?

The limited privilege applies to employment communications if (1) the statement was made in good faith (2) the statement was on any subject matter in which the person communicating has an interest to uphold or with reference to which the person had a duty to speak (3) the scope of the statement was limited to the identified interest, and (4) the statement was made on a proper occasion, in a proper manner, and to proper parties only.  Inter-corporate statements that do not satisfy each of those elements do not received privileged status.

Even if an inter-corporate statement does receive protection from the limited privilege, that protection can be lost if the privilege is abused.  To defeat the privilege, a plaintiff must prove the defendant acted with knowing or reckless disregard of the truth of the statement.  If that cannot be proved, then the limited privilege applies and the manager or co-worker is immune from liability.  Of course, if the statement complained about is not even entitled to the limited privilege, then standard defamation rules apply and there is no possible immunity from liability.