Employers can generally restrict job references to dates of employment to avoid defamation claims despite an appellate court’s affirmation of an insurer’s denial of coverage for a school district that did not warn a new employer about a teacher who sexually abused his students.

But employers may be obligated to provide more information to potential future employers in such rare circumstances, including those that involve the safety of minors, experts say.

“Most employers do not provide references, positive or negative, one way or the other, and it continues to be name, rank and serial number,” said Douglas R. Christensen, a shareholder with Littler Mendelson P.C. in Minneapolis who counsels employers on labor and employment matters.

Montville Township Board of Education in Montville, New Jersey, in September 1998, hired a first-grade teacher and track coach who resigned in June 2010 after several reports and investigations of his alleged sexual abuse, according to the June 26 ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Montville Township Board of Education v. Zurich American Insurance Co., which affirmed a lower court’s ruling.

In September 2010, he was hired by the Cedar Hill Prep School in Somerset, New Jersey. In March 2012, while still employed by Cedar Hill, he was arrested and indicted on charges of abusing a number of Montville students between 2005 and 2008, and a Cedar Hill student between 2010 and 2011. The teacher was later sentenced to 14 years in prison, according to news reports.

In January 2015, a Cedar Hill student who had previously sued the teacher and Cedar Hill for the teacher’s abuse added Montville as a defendant, alleging it knew about the sexual misconduct, failed to notify authorities and agreed not to tell potential future employers about that conduct to induce the teacher to resign.

The appeals court agreed with the lower court and held that Montville’s insurer, Zurich American Insurance Co., a unit of Zurich Insurance Group Ltd., was not obligated to defend the school district under a “prior known acts exclusion” in the abusive acts section of its insurance policy.

Attorneys in the case did not respond to a request for comment.

Experts say this case raises questions as to whether the school district failed in its duty to let authorities know about the abuse.

“If there is a duty to report, that duty cannot be used as a negotiating chip by the employer to negotiate an agreement with the employee” who is suspected of child abuse, said Jonathan Segal, a principal in the employment, labor, benefits and immigration practice group of Duane Morris LLP in Philadelphia.

But “as a general rule, the employer does not have a duty to warn” future employers, he said.

A former employer’s fallback position of providing only basic information is generally “the safest position,” Mr. Christensen said. This case “is a troubling one for sure, but I think there are some unique facts there that are not present in most employment situations,” including that a minor was involved, he said.

“Generally speaking, I think it’s a good policy” to provide only basic information “because you need to avoid the defamation-related liability,” said Joseph G. Schmitt, a shareholder with Niland Lewis PA in Minneapolis. “None of that is an argument for saying something that is inaccurate,” he said.

While this particular case involved schools, “in the private sector, there is no obligation in general to provide any information, and most employers just provide a neutral reference,” said Richard I. Greenberg, a principal focusing on labor and employee relations matters with Jackson Lewis P.C. in New York.

“Generally speaking, I do not advise my clients to give negative references unless there is a safety issue involved, or unless there’s a licensing board that might need to be notified of information” in cases, for instance, involving a doctor, said Melanie V. Pate, a partner in the litigation practice of Lewis Roca Rothgerber Christie LLP in Phoenix.

These cases, while fairly rare, “can be costly to defend if you’re an employer” because of legal fees and the cost of a possible settlement, she said.

But in the New Jersey case, “if I was the person making that decision, I would run the risk of a defamation lawsuit” because of the risk the person might harm other children in the future, “if I knew what I was saying was true,” Ms. Pate said.

Some state laws may protect employers from defamation charges if they provide accurate information about a former employee, experts say.

Anthony J. Oncidi, a partner in the labor and employment law group of Proskauer Rose LLP in Los Angeles, also pointed to a comparable case, a 1997 ruling by the California Supreme Court, Randi W. a Minor, etc. v. Muroc Joint Unified School District. 

In that case, school district administrators wrote letters of recommendation on behalf of a former administrator although they knew of prior charges or complaints of sexual misconduct. He was then hired by another school district, where he was charged with sexually assaulting a student.

The ruling said, “Although policy considerations dictate that ordinarily a recommending employer should not be held accountable to third persons for failing to disclose negative information regarding a former employee, nonetheless liability may be imposed if, as alleged here, the recommendation letter amounts to an affirmative misrepresentation presenting a foreseeable and substantial risk of physical harm to a third person.”

“If there is information that an employer has about a former employee that could endanger third parties,” then the employer “may very well have an obligation to disclose that information,” Mr. Oncidi said.

Philip K. Miles III, a shareholder with McQuaide Blasko Inc. in State College, Pennsylvania, said he would advise employers facing a comparable issue “to get in touch with legal counsel to talk through some of the concerns about defamation because it’s not quite as bad as a lot of employers think it is.”

“If you’re passing information along in good faith and not publicizing it,” but just informing someone who has a common interest in the matter, “there’s some protection against a defamation claim,” Mr. Miles said.