Thousands of job seekers are turning to reference-checking services to find out what previous employers are saying about them. Most states allow people to sue if defamation was found to interfere with subsequent employment. Some employers simply refuse to give references, which can be just as damaging as a negative reference. Fears of litigation have made employees even more reluctant to give references.
See "If an old boss smears you, hire a detective", Jennifer LeClaire, The Christian Science Monitor, February 29, 2004