Good Guys Construction Co. believes in open communication with its employees. Recently an employee was terminated when he showed up for work and the supervisor smelled alcohol on his breath. When rumors started circulating about layoffs and lack of work, Good Guys held a staff meeting and explained that the employee was terminated for arriving at work under the influence.

It is difficult to know how much to tell coworkers when an employee is terminated, especially if the termination is unexpected. But employers need to be careful that what they say doesn’t give the terminated employee grounds for a defamation lawsuit. Defamation can occur when an employer gives untrue information about an employee to a third party—in this case to co-workers. While truth is a protection against a defamation charge, this example is a prime case for a lawsuit because the employer had no specific proof that the employee had been drinking or was under the influence of alcohol except for the fact that a supervisor smelled alcohol on the employee’s breath. Since the employer didn’t confirm its suspicion with the positive results of an immediate drug and alcohol test, the employee could relatively easily deny that he or she had been drinking.

The law protects the communication of untrue information when it is shared in good faith with another party that has a corresponding interest—this is called “qualified privilege.” In this case, the supervisor telling management about the employee would be protected, but the employer telling co-workers would not be protected. When an employer wants to communicate an employee’s termination to co-workers, it is always best to reaffirm that the reasons for any employee’s separation are always kept confidential, but that the recent separation has no implied impact on the direction of or other job positions at the company.

Douglas Delp is founder of The Delp Group (delpgroup.com), which provides human resources, benefits, insurance, and payroll services to small businesses.