Fired and then slandered

What is the name of your state? Kentucky
my husband, who is 55, was terminated from his job of 20+years. since ky. is an at-will state the company said they were not required to give him a reason and that there was no appeal process. he has never been given any type of warning or been suspended at any time. the day after he was fired, employees of the company began telling the people in our community that he was fired because he caught a mouse at work, skinned it, cooked it in a microwave and ate it! this is absolutely false and a lie. can we sue this company because employees are saying these things? my husband was not given the opportunity to deny these allegations because he didn't know why he was being terminated.

can we sue this company because employees are saying these things? No. An employer is not responsible for everything their employees do or say.

Your husband could potentially sue the person who started the rumor if he can (a) determine who that is; (b) prove that the person fabricated the incident; and (c) demonstrate that he suffered damages as a result. (Being ticked off or embarassed by what is being said is not "damages.")

That rumor is so ludicrous that I can't imagine anyone would believe it, particularly anyone who would be acquainted with your husband. Does he really think that if someone contacts his former employer for a reference they're going to say that they fired him for skinning and cooking a mouse at work?!?