1. Whenever possible, warn the employee in advance that you won't be able to provide a positive reference. You may still receive calls from reference checkers who go outside the list of references provided by the candidate, but this should minimize it.
2. If you get a call anyway, you have the option of only confirming the person's title and dates of employment. However, be prepared for a savvy reference checker to ask if this is your policy across the board or just for this candidate.
3. If the employee worked with you more than a couple of years ago, you have an easy out: Explain to the reference checker (or the employee herself) that you don't feel equipped to be a reference because her work for you was so long ago and you can't remember the kinds of nuances that reference checkers are looking for.
4. Finally, consider being honest. As someone who has to check references myself, I'm grateful when I encounter the rare reference willing to be candid about weaknesses. After all, reference checking (and the whole hiring process, for that matter) is about finding out if the candidate and the job are a good match. If they're not a good match and it's not uncovered until too late, the company will be stuck with a poor performer and the employee will be stuck struggling in the job and maybe even losing it down the road.
However, if you do choose to give a less-than-positive reference, stick to objective facts you can prove. (Despite corporate paranoia about defamation cases, employers are permitted to provide negative references as long as they're truthful.)
Alison Green is chief of staff for a medium-sized nonprofit where she oversees day-to-day management of the staff as well as hiring, firing, and staff development. She is working with the Management Center to coauthor a book on nonprofit management. Her writings have been published in the Washington Post, the New York Times, Maxim, and dozens of other newspapers. She blogs at Ask a Manager.