Fraudulent Concealment – Employment

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 What is Fraudulent Concealment in Employment?

In the context of employment, fraudulent concealment occurs when an employer purposefully conceals a major element of a job for which a potential employee is interviewing in order to keep that potential employee from declining the position.

Fraudulent concealment may also be defined as the deliberate suppression, hiding, or non-disclosure of an important situation or fact which the employer is legally bound to reveal with an intent to deceive. Fraudulent concealment may occur when there is a risk of injury on a job, and the employer deliberately conceals that fact. An employer may also commit fraudulent concealment with a direct lie or lying by omission.

As a result of the employer’s misrepresentation, the employee may suffer physical or financial harm. An employer may make this type of misrepresentation:

  • Orally;
  • In writing; or
  • Through their conduct.

For example, an employer may be liable for an employee’s injuries from toxic chemicals if the employer knew about the danger and did not inform the employee or lied about the safety of the chemicals. Either way, the employer knowingly and deliberately did not inform the employee of essential facts that the employer was legally bound to disclose to the employee.

The burden is upon the employee to provide evidence that shows that the employer is guilty of fraudulent concealment. The doctrine of fraudulent concealment is occasionally used when the statute of limitations would otherwise bar the plaintiff from filing a lawsuit due to missing the legal deadline for doing so.

The nature of the employer’s fraudulent concealment may prevent the plaintiff, or the employee, from discovering the issue in time to file a lawsuit within the statute of limitations.

Fraudulent concealment may also affect the worker’s compensation system. In most cases, worker’s compensation is the only source of recovery for injuries that occur on the job. This system intends to compensate employees for injuries at a minimal expense to the employer.

However, if fraudulent concealment occurs, the injury claims may be processed through both the worker’s compensation system and the court system simultaneously.

How Can an Employee Prove Fraudulent Concealment?

The prospective employee bears the burden of proving that their employer or potential employer committed fraudulent concealment. If the potential employee or employee files a lawsuit against their potential employer or employer, the employee is the plaintiff, and the employer is the defendant.

The plaintiff must prove all of the elements of fraudulent concealment to recover damages. The plaintiff is required to show that:

  • The defendant suppressed or concealed 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, such as accepting a job, 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 known; and
  • The plaintiff suffered harm as a result.

For example, suppose the plaintiff was offered a position with their employer. The plaintiff accepted that position because they were told certain benefits come with it. Those benefits, however, were not included in the written language of the employment contract that the plaintiff signed. In this case, the defendant intentionally lied regarding the benefits provided to entice the plaintiff to accept the position.

In this example, all of the required elements are met because:

  • The defendant concealed the fact that the benefits would not actually be provided to the plaintiff;
  • The defendant had a duty to the plaintiff based upon their employer-employee relationship;
  • The defendant lied on purpose so the plaintiff would take the job;
  • The plaintiff did not realize the defendant lied; and
  • The plaintiff was financially harmed as a result.

In What Situations Does Fraudulent Concealment Generally Occur?

There are numerous employment contexts in which the issue of fraudulent concealment can occur. For example, an employee’s contract with their employer may state that an employee will not be terminated without cause before a specific date.

If the employer secretly has plans to terminate all of the employees to that contract immediately following the date provided, the elements of fraudulent concealment are present. If the employees were aware that they would be fired as of the date provided in the contract, they would have been less likely to take the job.

Even if the employer does not have a fiduciary relationship with the employee that would require them to disclose specific facts, other reasons may exist that would require them to disclose the facts.

For example, if an employer tells an employee they will not be terminated unless their job performance is unsatisfactory, or they tell an employee that they are being laid off for financial reasons but the employer is aware that the company’s situation is such that the employee’s position will be eliminated soon, the employer likely must disclose that fact.

In this case, while the employer is not stating an outright lie, they are effectively lying by omission. This is also a form of fraudulent concealment.

What Can an Individual Recover if Their Employer Committed Fraudulent Concealment?

If an employee has a claim for fraudulent concealment, they may recover damages that go beyond monetary compensation for lost wages and medical bills. The employee may also be entitled to punitive damages.

Punitive damages are not compensation for a single injury but intend to punish wrongful conduct by an employer and prevent the behavior from occurring again in the future. In many cases, the amount of punitive damages awarded is large.

Are there Defenses to Fraudulent Concealment?

Some defenses may be available to a defendant if they are sued for fraudulent concealment. Possible defenses may include:

  • The defendant may claim that the plaintiff knew of the supposedly concealed fact, and therefore, is unable to establish the elements necessary to prove fraudulent concealment;
    • The defendant may disprove any one of the elements needed to prove fraudulent concealment, and the plaintiff’s case will fail; and
  • Preemption. Some laws may take precedence over others if there is a conflict. For example, worker’s compensation laws and federal labor laws may take precedence over the doctrine of fraudulent concealment.

There may be other defenses available, but that will depend on the exact circumstances of the case. It is always essential to consult an attorney to determine what defenses are available.

Should I Consult an Attorney If I Experienced Fraudulent Concealment in Employment?

It is crucial to have the assistance of a workplace attorney if you have experienced fraudulent concealment in your employment. If you believe that your employer has fraudulently concealed a fact from you and you have been harmed as a result, you may be entitled to compensation. Your attorney can review your case, determine if fraudulent concealment occurred, and assist you with the lawsuit process.

It is also vital to seek legal assistance if you are an employer that has been accused of fraudulent concealment. Your attorney can review the situation, determine if any defenses are available to you, and represent you during any court proceedings.

Use LegalMatch today to find the right workplace attorney near you. There is no fee to schedule a consultation, and our services are entirely confidential.

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