Fraudulent concealment can occur in a number of contexts. As it relates to an employer-employee context, it occurs when an employer purposefully hides a major element of the job for which the potential employee is interviewing, in order to keep the employee from declining the job.
As a result of the employer’s misrepresentation, the employee may suffer financial or physical harm. The employer may make this misrepresentation orally, in writing, or through their conduct.
The burden is then on the employee to show evidence that proves that their employer is guilty of fraudulent concealment.
The doctrine of fraudulent concealment is sometimes used when a statute of limitations would otherwise bar a plaintiff from filing a lawsuit due to missing the legal deadline for doing so. The nature of fraudulent concealment may prevent the employee/plaintiff from finding out about the issue in time to file a lawsuit within the statute of limitations.
How Can an Employee Prove Fraudulent Concealment?
The potential employee, as mentioned above, bears the burden of proving that their employer or potential employer committed fraudulent concealment. If the employee files a lawsuit against the employer, they become the plaintiff, and the employer becomes the defendant.
The plaintiff must prove the elements of fraudulent concealment, and each element must be shown successfully in order for the plaintiff to recover damages. The plaintiff must show that:
- The defendant concealed or suppressed a material fact;
- The defendant had a duty to disclose that fact to the plaintiff;
- The defendant intentionally hid the fact to trick the plaintiff into doing something (taking a job, for example) that they would not have done if they had known that fact;
- The plaintiff did not know of the hidden fact, and would have acted differently if they had know; and
- The plaintiff suffered harm as a result.
Example: Let’s say the employee/plaintiff was offered a job with their employer. They took the job because they were told of certain benefits that came with the job. However, those benefits were not included in the written language of the employment contract the employee signed. The employer intentionally lied about the benefits in order to entice the employee to take the job.
In this situation, all the above elements are met, because:
- The defendant concealed the fact that the benefits would not actually accrue to the plaintiff;
- The defendant had a duty to the plaintiff, because they had an employer-employee relationship;
- The defendant lied on purpose so the plaintiff would take the job;
- The plaintiff did not realize that; and
- The plaintiff was financially harmed as a result.
In What Situations Does Fraudulent Concealment Generally Occur?
There are multiple employment contexts in which the issue of fraudulent concealment may occur. For instance, an employee’s contract with their employer may state that employees will not be terminated without cause before a certain date.
If the employer secretly plans to terminate all employees who are a party to that contract right after the date given, the elements of fraudulent concealment are present. If the employees knew that they would definitely be fired as of the date given in the contract, they would be less likely to take the job.
Even if the employer does not have a fiduciary relationship with the employee which would require them to disclose certain facts, there may be other reasons why they have to disclose them. For instance, if an employer tell their employee they will not terminate them unless their job performance is unsatisfactory, or they tell the employee that they are being laid off for financial reasons, and the employer knows that the company’s situation is such that the employee’s position will actually be eliminated soon, the employer would probably have a duty to disclose that fact.
While the employer is not stating an outright lie, he or she is effectively lying by omission, which is a form of fraudulent concealment.
Are there Defenses to Fraudulent Concealment?
There are defenses which a defendant may use if they are sue for fraudulent concealment. Some of these defenses are as follows:
- The defendant may claim that the plaintiff knew of the supposedly concealed fact, and therefore cannot establish the elements necessary to prove fraudulent concealment. In fact, the defendant may disprove any of the elements needed to prove fraudulent concealment, and the plaintiff’s case will fail.
- Preemption: There are a number of other statutes which may rule if they come into conflict. Workers’ compensation laws and federal labor laws may take precedence over the doctrine of fraudulent concealment.
There may be other defenses available to you, but it will depend on the exact circumstances of your case. It’s always important to consult an attorney before you make any serious legal decision.
Should I Consult an Attorney If I Experienced Fraudulent Concealment in Employment?
If you believe that your employer has fraudulently concealed something from you, and you have been harmed or injured by this concealment, then an employment attorney can help. An attorney can help you determine whether you have a good case for fraudulent concealment and will represent you in your case.