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Edited on Mon Nov-15-04 12:24 AM by Rumba
...is talk to HR.
I'm not sure what the law says about badmouthing a former employee, but remember, anyone can sue for anything. Whether Jane wins or loses, the company doesn't need that.
HR is your wife's ally in this. Unless they recommend otherwise, I think the next thing your wife should do is talk to Jill, and say in a non-accusatory way, "Jane is complaining about this, and I don't know if it's true or not, but please make sure not to put the company at risk by making comments that could be construed as badmouthing Jane."
By the way, one principle that applies in many of these types of disgruntled employee situations, is that once a manager knows about the situation, they are protected (to some degree?) from personal liability if they can demonstrate that they notified higher management and took action to address the grievance. If they sit on it the company gains a measure of protection and, if the situation comes to a head, the company can say the manager in question didn't follow company policy.
So involve HR, follow their advice, have non-accusatory discussions with Jill, and document everything.
(Edit) btw, how big is your wife's company, and do they have an HR group/director/whatever?
(edit2) Probably even better than talking to Jill is sending an email to everyone that works for her, stating that derogatory comments about past employees aren't appropriate. Perhaps also with a followup private conversation with Jill. And document everything.
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