Fraud
Actionable fraud and misrepresentation may occur prior to employment, on the job or even post
employment if the defrauded person justifiably relied on facts that were intentionally misrepresented or
concealed and he or she was damaged thereby, providing that the person misrepresenting or concealing
the fact knew that the representation was false. But just because a promise is not kept or an expected
event does not occur may not be enough to establish fraud. The person making the promise or stating
the false fact must have made the promise with no intention to honor it, or known that the facts were
false at the time he or she stated them, or had no reasonable basis for believing them to be true. Later
changes in circumstances may give rise to actions for breach of contract, but fraud must be a known and
intentional lie or concealment when stated.
Pre-employment fraud often occurs when a job candidate is induced to give up a lucrative position or
make financial commitments to relocate based on false statements. California Labor Code $970
specifically prohibits employers from inducing employees to change their residence to, from or within
California by making "known false representations" concerning the nature, length, compensation or
physical conditions of employment and the law allows for the recovery of double damages. A general
intentional fraud action also allows for the recovery of compensatory and punitive damages that may not
be available for simple breach of contract or under $970.
However, employers are often very optimistic and over zealous in their expectations about the company’s
business prospects and expectations. Promises are often made that later cannot be kept. Indeed, in the
absence of an enforceable employment contract, employers of at-will employees are generally able to
alter compensation, benefits, job assignments, etc. prospectively at any time during employment. If
employees are persuaded to join the company, and the rosy hopes do not pan out, it is not fraud unless
the recruiter knowingly lied at the time in order to induce action on the part of another.
By the same token, employees who falsify resumes or applications and induce a company to hire them
are generally dismissed from employment once the lie is discovered. Civil actions against such
employees by the company are rare but certainly possible as long as the above elements are satisfied.
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