It may not happen, but many companies believe it could happen. Consequently, they say next to nothing about ex-employees - only the dates of employment. If you're the company being asked for the reference there is no upside in you saying that Joe was fired - why would you want to help another company, and why would you want to risk (however infinitesimal) a law suit. This is commonly defined by policy, simply ask the last company that you worked at what their policy is for references and what data they will reveal.