Re: Bad references
For anyone who doubts this, I challenge you to point to a law that says anything like that, or a court case where an HONEST reference was deemed illegal.
And almost every reference you can find will tell you the same:
The reason it's not generally done is a) professionalism, b) avoidance of the possibility of a lawsuit (by the time you're into references for people that haven't done a good job, you tend to tread carefully, HR-wise), c) it's easier to just REFUSE to provide a reference which tells people roughly the same without the potential liability.
But it is NOT illegal to provide an HONEST reference, good or bad.