Is there any potential danger in providing personnel information, as opposed to the records themselves, to third parties?

Absent a release from the employee, a release of information required by court order, or as otherwise provided by law, there is always a potential danger of liability when sharing confidential personnel information with third parties.

This information can be requested in a variety of scenarios. The most common would be one in which a prospective employer seeks a reference on a prior employee. In this situation, releasing negative information can have a detrimental impact on an ex-employee's ability to find work, and may subject the employer to claims of defamation. So-called blackballing is a common component of many employment litigation cases.

A policy of only releasing positive information when someone calls for a reference, by implication, may work to the detriment of ex-employees whose prospective employer obtains no information.

Although some states have enacted laws to attempt to shield employers from liability upon the release of information gleaned from personnel files in reference situations, even those statutes typically exempt from protection information that is untrue, information provided in reckless disregard of the truth, or information that is not contained within the personnel records themselves.

For state specific information, see State Laws.

Source:Employment Law Answer Book, Mark R. Filipp, James Ottavio Castagnera (Aspen Publishers).