Did Your Employer Misrepresent Your Job Or Withhold Vital Information? That May Be Fraud

It’s not unusual that people are duped into giving notice at their job, only to have the offer pulled or find out the job is nonexistent. Some folks get lured into a job with promises of higher pay, better title, specific hours or location, and it turns out that the representations made to lure them in weren’t true. If this happens, you might have a case for fraud.

There are two types of fraud that Florida courts recognize in these situations. The first is a false statement made, knowing it is false, intending that you rely on it. A good example is what happened in Gandy v. Trans World Computer Tech, 787 So. 2d 116 (Fla. 2d DCA 2001). There, an employee alleged that he was induced to terminate his lucrative business as a freelance consultant with the promise of long-term employment as a manager. The employee alleged that, when the offer was made, the company had no intention of keeping him as a long-term employee but rather intended to force him to quit after a division was created. These allegations withstood a motion to dismiss.

So if you leave your job based on an offer that you'll be the manager, only to find out you're the janitor or secretary, said you'd be paid $100K/year and then paid much less, or if you find out you were only hired to be a temp to fill in for someone out on disability or maternity leave, you might have a fraud case. You may also have a breach of contract case, but that's another post for another day.

The other type of fraud is fraudulent concealment, basically, failure to disclose information that the employer has that would have made you decline the offer. A good example is what happened in Telesphere International, Inc. v. Scollin, 489 So. 2d 1152 (Fla. 3rd DCA 1986), where the employer, through a principal, had fraudulently induced an employee to join the company by deliberately failing to inform him that the system he was hired to market would fail and he would be discharged. The appellate court found that the plaintiff had pled the elements of actionable fraudulent concealment: the defendant deliberately and in order to deceive withheld material facts from plaintiff, when there was a duty to disclose, where the party making the representation had superior knowledge in the matter or acted in a confidential or fiduciary capacity, when plaintiff relied on the lack of disclosure to his detriment.

These are just some examples of what would be fraud. I cited Florida cases, but the claims are likely similar in other states as well. So if your employer misrepresented the job or the pay, or withheld vital information, you might have a remedy.

More Pro-Employee Bills To Watch In The Florida Legislature

To their credit, some Florida legislators are doing their darndest to try to fix Florida's anti-employee legal climate. I wrote about some pro-employee bills filed, and now there are some more to keep an eye on this legislative session:

Banning employer fraud: A bill proposed would make it illegal for an employer to procure an employee's services fraudulently, and also beefs up anti-retaliation provisions for employees who complain about unpaid wages.

Pregnancy discrimination: Two identical bills would add pregnancy to the protected classes under the Florida Civil Rights Act. I'm not sure why this is being done in light of the Florida Supreme Court's ruling last year that pregnancy is already protected.

Overtime: Another bill changing Florida's overtime pay law from 10 hours per day to 8 was withdrawn, but this new bill replaces it.

Bullying: A second bill that would ban workplace bullying has been filed.

Unemployment: A bill that would modify unemployment qualifications is a mixed bag. It would protect victims of domestic violence but also would disqualify disabled employees who turn down a reasonable accommodation offered. Disabled employees will now face a trial over their discrimination claims in the unemployment proceeding if this bill passes. Overall, I think it's more anti-employee than pro-employee.

I'll be keeping an eye on these bills during the session. Wanna bet that zero pro-employee bills will pass? I won't hold my breath that this legislature or governor would do anything to help the majority of its working citizens.

States With Pro-Employee Laws: No Solicitation Of Employees Through Misrepresentation

I've written before about the possibility of suing an employer for fraud if they misrepresented the job. If you are lured into a job, specifically if you give up another job or move to accept the job, and the employer had no intention of keeping the promises they made, you may have a claim against them for fraud. However, any such claims have to be made under common law in most states. You may or may not succeed, depending on your state law and the facts of your case.

However, one state, California, thought it was so important to protect its citizens from this kind of employer misbehavior that they passed a law making it illegal for employers to solicit employees through misrepresentation.

The California Labor Code provides:

970. No person, or agent or officer thereof, directly or indirectly, shall influence, persuade, or engage any person to change from one place to another in this State or from any place outside to any place within the State, or from any place within the State to any place outside, for the purpose of working in any branch of labor, through or by means of knowingly false representations, whether spoken, written, or advertised in printed form, concerning either: (a) The kind, character, or existence of such work; (b) The length of time such work will last, or the compensation therefor; (c) The sanitary or housing conditions relating to or surrounding the work; (d) The existence or nonexistence of any strike, lockout, or other labor dispute affecting it and pending between the proposed employer and the persons then or last engaged in the performance of the labor for which the employee is sought. 

 971. Any person, or agent or officer thereof, who violates Section 970 is guilty of a misdemeanor punishable by a fine of not less than fifty dollars ($50) nor more than one thousand dollars ($1,000) or imprisonment for not more than six months or both. 

 972. In addition to such criminal penalty, any person, or agent or officer thereof who violates any provision of Section 970 is liable to the party aggrieved, in a civil action, for double damages resulting from such misrepresentations. Such civil action may be brought by an aggrieved person or his assigns or successors in interest, without first establishing any criminal liability.

I haven't found any other state that offers its working taxpayers this kind of legal protection. Why not? Maybe some legislators in other states can explain to me why they think it's okay to make someone leave their job by saying the position is a long-term one, but they're  really only looking to cover for someone out on maternity leave. Or they just want to lure a competitor's top salesperson over to get all their contacts, then dump them. Or they say the job is for a manager's position, but it turns out the job is for a much lower paid clerk's position. I've seen each of these situations play out in real life, so don't tell me it doesn't happen.

Maybe there ought to be a law in your state. Anyone listening in Florida?

Noncompete Answers: Am I Bound If My Employer Violates FMLA?; Wages Cut Right After Signing; Can They Restrict My Livelihood?

Having received more questions on noncompete agreements than any other issue, I can only assume that more and more employers are imposing these contracts on employees all over the country. There are lots of defenses to them, but defending takes money. I continue to hope that some legislators will wise up and help their constituents escape indentured servitude, or that some attorneys general will start fighting illegal noncompetes with antitrust laws. In the meantime, I'll keep trying to answer your questions. I encourage anyone who is being asked to sign one, or whose ex-employer is trying to enforce one, to contact an employment attorney in your state for advice. Here are my general answers (not legal advice) to some more non-competition agreement questions:

If My Employer Violates FMLA, Am I Still Bound By My Noncompete?

Hi . I am a nurse, licensed in Kentucky. I had worked 6 plus years with a contact agency that was contracted to the state. My question is this - when an agency is contracted to such an entity, do they have to follow the state's policies and protocol for discipline? I had been a very well respected and appreciated employee that had been contracted to the same entity for over 12 years. When I was both working full-time and caring for my dying Father at home, I had periods of tardiness, which was never a past problem. I was ultimately released by both the Vendor and my agency. My question is this - was it not my agency's place to request - on my behalf - FMLA? I did win my unemployment case.Would I still be bound to my former agency's full non-compete ? 

Gloria L.

Hi Gloria. I'm sorry to hear about your father and the loss of your job all at once. As to the noncompete agreement, there's a defense to enforcement called "unclean hands." This defense means that if your employer wants to keep you from working for a competitor, they must have acted ethically and in good faith. If they broke the law or did something wrong to you, then a court might be persuaded not to issue an order that you can't work for a competitor.

As to whether they have to follow your state's policies, that will depend on their contract with the state. Does that get you anywhere in defending against a noncompete agreement? I don't know how, but it's possible maybe you'd have a wrongful termination claim in your state if they were bound by certain procedures.

Now, let's talk about that FMLA claim. You have to notify your employer of your need for FMLA in most cases. That means, when you saw that your productivity was slipping and you couldn't get in on time, you should have asked for FMLA, either regular or intermittent, so you could fulfill your duties as caregiver for your father. They'd have had to grant it based on what you describe. However, you didn't ask. Should they have offered it? It sounds like they were on notice that you were a caregiver and that you were in trouble, so maybe they should have. This might be a FMLA violation. You should talk to a Kentucky employment lawyer. 

Does all of this get you out of the noncompete? Maybe. Good luck!

I Signed, Then My Employer Cut My Wages

I was asked to sign a noncompete, & when I did was informed that my wages were being cut. No wages were specified in the contract, but had I known beforehand, I would not have signed. Also, less than a week after I signed it my hours were cut & have since been cut to zero. I have since signing, been in a hostile work environment & made to feel I'm doing everything wrong. I am now at zero hours. & I also believe I have grounds for a discrimination & sexual harrassment case. 

Tessa M.

Hi Tessa. In some states, continued employment is valid consideration for a noncompete agreement. That means employers in those states can shove an agreement in front of you and say, "Sign or be fired." However, if they knew they were about to cut your wages and then cut your hours to zero, they should have disclosed it before you signed. The defense you may have is fraud.

As I discussed above, discrimination and sexual harassment might also support a defense of "unclean hands." I'd suggest talking to an employment lawyer in your state about these two defenses and any other defenses you have to enforcement of this agreement.

Is It Legal To Restrict My Livelihood?

I work in Texas and I am reviewing a Non-Competition agreement with the following stipulations:

1.3 Non-Solicitation-Non-Competition. Without prior written approval of COMPANY X management, Consultant agrees:
 

(a) For a period of twelve (12) months following the termination of this Agreement or the relationship provided hereunder, Consultant will not, either directly or indirectly, call on, solicit, or induce any Consultant or employee of COMPANY X whom Consultant had contact with, knowledge of, or association with in the course of this relationship to terminate his or her employment with Company X.
(b) For a period of twelve (12) months following the termination of this Agreement or relationship provided hereunder, Consultant will not form or hold an interest in any entity that directly competes with COMPANY X.
(c) During the term of this agreement for a period of twelve months following termination of this agreement with COMPANY X, Consultant shall not solicit or induce, any past or current customer of COMPANY X to cease doing business, in whole or in part, with COMPANY X.

Is this legal to create this kind of document--affecting a persons livelihood for an entire year? If that company lays me off can they stop me from pursuing my line of work?

Would you suggest a strategy for filling out this paperwork?

Steve C.

Hi Steve. It really depends on what work you are doing and what kind of business this is. If you are a chemical engineer developing the new formula for Coke, then I can see how they wouldn't want you to go straight to work for Pepsi or form your own soda company. You have a vital trade secret that they need to protect. They might have a legitimate interest to protect. However, if you're contracted to do their landscaping or waste removal, it's hard to imagine any possible interest they would have to protect other than preventing competition.

An agreement that is solely for the purpose of preventing competition violates antitrust laws. 

Since you're a contractor, you can always say no. If they want you, then you have the power to negotiate more reasonable terms. The time to negotiate is before you sign.

If you have a question on noncompete agreements, discrimination, whistleblowing, employment contracts or any other employment law issue, and don't mind having me answer it publicly, feel free to ask it in the comments section. If you ask me here, you're asking for general information and not for legal advice. The question and answer will be public and will not be covered by attorney-client privilege, nor will it establish an attorney-client relationship. If you need legal advice or have an urgent legal issue that needs to be dealt with, contact an employment lawyer in your state.

Answers To Your Questions On Noncompete Agreements

I was just going through some of my old blog posts when, what to my wondering eyes should appear, but new(ish) questions on some posts from long, long ago. The post with the most questions is  Non-Compete Agreements - Top 5 Ways To Get Out of Yours, which I wrote in 2010. Since I'm a fan of all things undead, I thought I'd pick a couple of neglected questions and bring them back to life by answering them here.

Please remember that asking me questions in my blog doesn't create an attorney-client relationship, nor are my answers legal advice. I'm glad to discuss legal issues generally and offer my thoughts. Asking here is for public consumption, as are my answers.

Fired 10 Days After Signing Noncompete

Here's a question from Jeremy M:

My state (Kansas) has a law saying employment can be enough consideration at the time of hire, but I can not find anything relating to a condition of continued-employment. After a year of employment with-out a non-compete at a local sales firm I was threatened with my job unless I signed a non-compete. It was during the holidays last year and I was the sole-provider for my family. After a couple of weeks of almost daily mentions I finally signed under pressure, only to be terminated 10 days later. It truly felt like it was a setup.

Do you know where I can research more regarding the consideration clauses of my state? I don't feel I have the resources for a employment lawyer, and am considering self-representation. Thank you for any insight!

 I'm so sorry to hear about this Jeremy. You'd be surprised how common it is for employers to demand an employee sign a noncompete where the only consideration is continued employment, then fire the employee shortly after firing. That's very likely considered fraud in the inducement, which means that they never intended to continue your employment when they demanded you sign, so the fraud might void the noncompete. The elements of fraud in the inducement are: 1) A false statement of material fact; 2) The person making the statement knew it was false or made the statement with reckless indifference as to its truth or falsity; 3) They made the statement knowing you'd rely on it; 4) You did rely on it and were damaged. Sounds like your situation.

Some states also recognize fraud by omission, where one party has special knowledge that the other party couldn't discover, or where they had a duty to disclose, and treat the omission the same as if they'd made a false statement. Unless something really drastic happened in those 10 days, such as losing a major customer or being hit by a meteor, the company probably knew you were going to be fired when you signed.

I looked for a place online that outlines the noncompete laws in all 50 states and found one here by the firm Beck Reed Riden LLP in Boston. Their chart says Kansas is one of the states that allows continued employment as valid consideration. However, if they never intended to continue your employment, that might also be a failure of consideration.

I'd suggest talking to an employee-side employment attorney in Kansas about your rights. You can search for attorneys by state on the National Employment Lawyers Association website. NELA members represent employees.

Can Customers Follow Me If I Don't Have a Non-Compete?

Here's a question from Arsalan:

Hi Donna,
I am switching jobs and going to another company who is a potential competitor to my current employer. There are clients at my current employer who are asking me if they can come to my new employer because they want me to provide them the services. I do not have a non-compete with my current employer. Should I encourage the clients to come to my new employer and it's asking for trouble.

Thanks!

 Hi Arsalan. If you don't have a noncompete, then make sure you don't have a non-solicitation agreement. That's an agreement saying you can't solicit the company's customers to follow you to your new employer or to leave/reduce business with your former employer. If you have neither, then you're probably free to do business with your former employer's customers.

A couple of things come to mind to watch out for. If the customers have contracts with your former employer, don't ask them to or encourage them to break or cancel the contracts. You might get sued for something called tortious inteference with a contractual relationship. If the customer already left them or intends to leave them, then you probably won't be tortiously interfering.

If the company has a confidential customer list, then be careful. You might get accused of violating trade secrets law if you take the customer list with you and start using it. You're better off using publicly available information if you can. For instance, if you sell a computer program for banking, get a banking directory or Google "banks" and start from there. In most states, publicly available information is not a legitimate interest for your former employer to protect even if you do have a noncompete.

When in doubt, talk to an employment lawyer in your state about your rights and responsibilities. Good luck!

That's all for the zombie Q&A for now. I'll try to resurrect some old questions again in a future post.

Donate A Kidney To Your Boss? That’s A Firing

Debbie Stevens, gave her kidney to a man on the donor list so her boss could secure a match. Was she rewarded? Promoted. Nope. This is corporate America. You can be fired even if you literally give a piece of yourself for your job.

 Instead of rewarding her, the boss started pressuring her to come back to work even though she didn’t feel well and was still recovering. Once she got back, they took away her overtime, demoted her, and transferred her 50 miles from her home. She hired a lawyer to try to resolve the matter. The lawyer wrote a letter, and she was fired.

 I know I’ve talked about at-will employment and being able to legally fire employees for any reason or no reason at all. Does that mean you can be fired after you donate your kidney to your boss? Not necessarily. Here are just some of the claims she might have:  

Discrimination: If the employer failed to accommodate her recovery and then retaliated when she needed extended time off, she might have a claim under the Americans With Disabilities Act. Under that law, the employer must grant a reasonable accommodation, including extended leave, unless it can show an undue hardship. Retaliating against her after her return with a pay cut, demotion and transfer would also likely be a violation.  

Family and Medical Leave: If she was out for 12 weeks or less, then she’s likely entitled to recover under the Family and Medical Leave Act, which requires that she be restored to the same or an equivalent position once she returns from leave. Unless there were substantial cutbacks while she was gone, they’ll have a hard time arguing the position was equivalent. Even a distant transfer without a demotion is probably not considered equivalent. If she was out 12 weeks and one day or more, she’s probably out of luck on FMLA claims.  

Fraud: Did the boss promise continued employment or even favoritism if she gave of herself? Maybe. If that happened, she might claim fraud.  

Breach of contract: If the boss offered her anything specific, such as continued employment or a promotion, in exchange for the transplant, there might be a breach of contract claim. Although contracts in exchange for body parts may well be against public policy and unenforceable.

Personally, I think the courts should allow her to repossess. But since the recipient wasn’t involved in all this, she’s probably out of luck with that. In a perfect world, the court would have the power to make the company find her a replacement kidney to make her whole.

This isn’t even the worst firing I’ve ever heard of, but it’s up there. The employer should be ashamed, but I’m sure they’ll fall back on the old canard of at-will employment.

 To borrow from Joseph Welch (a victim of McCarthyism), I have to ask the employer what I hope the jury will ask: At long last, have you left no sense of decency?

Fake Job Offers, Phony Jobs and Employer Fraud

This question from Ask A Manager really struck a nerve for me:

Hi. I recently accepted a job offer via e-mail, handed in my notice with my current employers, a new e-mail then arrived stating my contract was being drawn up, then a few days later I receive a phone call retracting their job offer, what are my rights??? Please help.

You’d be surprised how often this happens. The mistake I see is that you gave notice before you got a signed contract. You shouldn’t give up your job unless your new offer is 100% final. That means contract signed if there is one, background check passed, and any contingencies have occurred.

It’s not unusual that people are duped into giving notice at their job, only to have the offer pulled or find out the job is nonexistent. Or maybe you’ve been lured into a job with promises of higher pay, better title, specific hours or location, and it turns out that the representations made to lure you in weren’t true. When this happens, you might have a case for fraud.

In order to claim fraud, the statement(s) must been false, and the company had to know they were false or be recklessly indifferent as to their truth or falsity. You must have relied on the false statements and changed your position. The company will probably claim that the person who made the representations believed them to be true at the time. Cases like this can require massive discovery, time and expense.

Another theory you might have to pursue against these unscrupulous employers is tortious interference with your employment relationship. I haven’t seen any cases attempting this type of claim, but it might be viable in your state. Basically, the theory would be that the phony employer interfered with your employment, knowing that you would lose your job, and that they were reckless or negligent in their behavior.

I’d be interested in hearing from other lawyers who have brought or defended this type of case to see what happened.

The sad truth is that, with at-will employment, you could work one day and they could decide you were a “poor performer” or “didn’t fit in.” Mostly, switching jobs is a high-risk activity. Be careful out there. Do your due diligence on the new employer. See if they make a habit of this type of behavior. Try to find out what kind of turnover they have. Speak to current or former employees if you can.

In my view, doing this to someone should be a crime. In this anti-employee environment, I suspect it won’t happen. Still, anyone who convinces someone to leave their job in this economy with pie in the sky promises that turn out to be phony deserves to spend some time behind bars.

Donna’s tips:

a.       Get that job offer in writing. Make sure you have everything you think is essential in it. If the recruiter told you that you’d only work Monday to Thursday and you need Fridays off for a class, either make sure they put it in writing or write them a letter or email confirming the information.

b.      If the job offer is contingent, don’t give notice unless all the contingencies have been met. If you have to pass a background check, wait until they tell you that you’ve passed, then confirm that information in writing. Tell them you’re relying on that information and will be giving notice at your current job. If you get a conditional offer and you need to discuss disability accommodations, get the accommodations agreed to before you quit your job.

c.       Don’t move your house without getting some guarantees that the job will last for a minimum period of time. It’s best to have a contract saying you can only be fired for cause if you’re uprooting your family.