Not necessarily.  The U.S. District Court for the District of Minnesota recently dismissed a defamation claim that relied on accusations of blackmail and extortion in the widely publicized case of Michael Brodkorb v. State of Minnesota et al.
Michael Brodkorb formerly worked as the Communications Director for the Minnesota Senate Majority Caucus.  In December of 2011, the Secretary of the Senate, Cal Ludeman, fired Brodkorb after an extramarital affair was revealed between Brodkorb and then-Senate Majority Leader Amy Koch.  After his termination, Brodkorb threatened to sue the Minnesota Senate for gender discrimination and offered to engage in mediation of his claims.  Following that threat, Cal Ludeman released a press release that suggested Brodkorb was trying “to extort a payment from the Senate” and stated to a newspaper reporter that Brodkorb was attempting to “blackmail” the Senate.
Brodkorb subsequently filed a lawsuit alleging a number of different claims.  One of the claims was a claim for defamation based on the statements relating to alleged extortion and blackmail.  On February 13, 2013, the court granted the defendants’ motion to dismiss the defamation claim.
The court rejected Brodkorb’s argument that the terms extortion and blackmail were defamation per se because they allege criminal conduct.  The court explained that the terms extortion and blackmail have “broader non-legal” meanings and are often used colloquially.  The court found that Ludeman used the terms in the “generalized sense, and not as a label for punishable criminal offenses.”  In addition, the court held that because the statements were made in a “heated context,” they could not reasonably be interpreted to accuse Brodkorb of “engaging in the crimes of extortion and blackmail.”
The court also found that the statements could not be defamatory because they could not be proven true or false.  Instead, the court characterized the statements as “simply subjective statements of rhetoric and hyperbole.”  The court emphasized that a reasonable person would have understood the statements to be hyperbole given that they were made in the context of heated negotiations relating to Brodkorb’s threatened lawsuit.  Accordingly, the court held that the statements could not give rise to an actionable defamation claim.
Takeaway:  The Brodkorb case shows that, in the right context, referring to a former’s employee’s settlement demands as “extortion” or “blackmail” may not necessarily be defamation.  On the other hand, the defendants in the Brodkorb case could have avoided the defamation claim (and some legal fees) by being more cautious about their language.  For that reason, it is advisable for employers in most cases to avoid making statements about extortion and blackmail by their former employees – even if the statements may not result in actionable defamation.