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Defrauded into Accepting Employment

California has strict laws preventing employers from lying to potential employees to get them to accept a job. As a statewide California employee-side law firm, we’ve seen cases where employees are promised long term jobs, only to be “laid off” after they have shared special knowledge or skills. In other cases, an employee may be promised a job for long term, but not told that he or she is just a place-holder until an owner’s son gets a professional degree, or a large sale is made and commissions then are not paid on a pretext. In essence, many wrongful termination, retaliation and harassment cases are predicated on violations of the Civil Code or Labor Code. Danz Danz and Associates welcomes hearing your story!

What are the elements of fraud that a California employee must prove? First, the fraud must be pled in your lawsuit in detail. This allows the employer to prepare to defend the charge. Be prepared to state in your complaint the “who, why, when and where” elements and you’ll be fine. If all the documents which prove the fraud are in the possession of your employer, more liberality will be allowed and less detail required.

A major new development in California law is the case of River Island Gold Storage vs. Fresno-Madera Production Credit Ass’n, 55 Cal 4th 1“69 (2013(. This case holds for the first time that fraud may be used to set aside a written contract where it was entered into on fraudulent premises. Fraud undermines the basic validity of the parties’ agreement,.

Another issue is whether the employee’s reliance on the fraud or concealment was reasonable. This is a question of fact for the jury. It is enough that the reliance on the fraud played a substantial part, not the entire role, in causing damage to the employee. This is in line with the recent ruling in the case of Harris vs City of Santa Monica, which holds that discrimination and/or retaliation for complaining is a substantial factor in the adverse employment action. Courts look to the plaintiff’s reasonable belief in light oif his own knowledge and experience. ┬áThe more experienced you the plaintiff/employee are, the higher the burden to prove you didn’t know the truth and could not have reasonably discovered it.

Once the elements of a fraud claim are established, a most interesting issue damages. There are two standards, one is called “out of pocket” and the other “benefit of the bargain”. Out of pocket restores you to the income that you had before the fraud (say quitting a good job to move here). The benefit of the bargain looks to what you should have enjoyed (say future lost wages for a reasonable period of time).

Labor Code 970 (and damages doubled under LC 972) makes it illegal to induce an employee to move in, out, or within the state based on false promises as to the kind, nature or duration of the work. Many of our wrongful termination cases have arisen from complaints by employees that they were not told the truth about their new jobs. Some allege unsafe conditions; others complain about failure to pay commissions as promised; others about the financial strength of the company. These folks are often not told that the burden of making the division profitable is on their back. Combined with allegations of discrimination, retaliation or harassment, most settlements and verdicts are in the six figures. Danz & Associates practices in Los Angeles, San Diego, Sacramento, San Francisco, Santa Rosa, Pasadena, Fresno, Bakersfield, and there’s probably an office near you.