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dlish, there is no law in the US prohibiting an employer from giving an ex-employee a bad reference.
There are laws that allow an ex-employee to sue an ex-employer for a defamatory reference, and the standard of proof isn't all that high. The best defense against such a suit is to prove that your (the ex-employer) claims in the bad reference are true, which generally requires lots of documentation and backup. This is one of the main reasons that disciplinary action requires paperwork with signatures ("getting written up").
Thus, almost every company has a policy of only confirming dates of employment and maybe position(s) held and base compensation and maybe, in rare cases, a positive reference.
Most sources will counsel you that if you want a good reference, either get a letter from or an agreement with a previous supervisor who is willing to do that for you on a personal basis. But be aware that you are probably asking him/her to violate company policy in order to do that, risking his job.
This situation has come about due to the large number of lawsuits, some merited but many frivolous.
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