Fraudulent inducement of employment occurs when an employer makes a false statement to an employee about something to make them take a job, or continue working a job, when the employee would not have taken or kept the job had they known the truth of the statement.

For example, boss X might say to a job applicant A: "Come work for my company, we'll pay you $30 an hour!"  If job applicant A takes the job from boss X because of the statement that he will be paid $30 per hour, but boss X only pays $20 per hour, job applicant A might be able to sue boss X and the company for fraudulent inducement of employment.

As another example, an employee who has been told that they will not be fired, but who then signs an employment contract including an at-will employment provision, cannot justifiably claim fraudulent inducement for their termination. They may, however, have a claim that they would not have taken the job in the first place, had they not been given an employment guarantee.

The most common types of false statement an employer can make to an employee to entice them to take, or keep, a job are associated with:

  • Length of employment;
  • How much the employee will be paid or the terms of compensation (to include other benefits such as health insurance and paid leave); and
  • Work conditions the employee can anticipate (pleasantness of the work atmosphere, working hours, opportunities for success).

If an employer makes a false statement and fraudulently induces employment, it may be possible for the employee to sue the employer for damages.

What Do I Need to Prove to Sue for Fraudulent Inducement of Employment?

In order to sue an employer for fraudulent inducement of employment, an injured employee must prove that:

  1. The employer made an intentional misrepresentation of a fact;
  2. The misrepresentation was material to the decision to accept or continue employment;
  3. They reasonably or justifiably relied on the misrepresentation; and
  4. They suffered some injury.

An employee who is injured because of a false statement by an employer can have alternative means of recovery too.  They include suing for:

Proving fraudulent inducement can be difficult for several reasons. First, as stated above, one of the elements to be proven in a false inducement case is a false statement of fact. Fact must be distinguished from opinion, and the line between them can be fine when it comes to statements the employer made to the employee when trying to induce them to employment.

Secondly, another of the elements which must be proven is that the employee relied on the employer’s inducement justifiably. They must have good reason for relying on what they were told. Lastly, if a written employment agreement is entered into after the inducement conversations, and the written agreement states that it contains the entirety of the agreement between employer and employee, it can be difficult to then prove that the employee relied on information from the employer that falls outside the contract.

In general, any conversations for which there are no records can be difficult to prove in court. Email correspondence may be more reliable, but it will always depend on the individual jurisdiction if they will accept email correspondence, without any formal signature or localizing it in one document, as a contract or formal agreement.

Are There Any Defenses for Fraudulent Inducement of Employment?

An employer who is sued for fraudulent inducement of employment has many defenses available to them. They include:

  • No fraudulent misrepresentation took place;
  • The statement the employer made is covered by an employment contract, and the only liability could be for breach of contract;
  • The statement was not intentionally made;
  • No employee could have reasonably or justifiably relied on the statement;
  • The misrepresentation was a promise and not enforceable under contract law;
  • A federal or state statute bars the lawsuit; or
  • A traditional workers' compensation claim is more appropriate.

To put simply, it’s important that any inducement of employment (like promises for high pay or special benefits) are put into writing before you accept employment. Relying on rumors or promises made by an employee who does not have the authority to offer them would not allow you to say you were fraudulently induced.

Do I Need an Attorney to Handle my Fraudulent Inducement of Employment Issue?

If an employer made false statements to get you to start or continue a job and you became injured as a result, or you are being sued by an employee for fraudulent inducement of employment, it is strongly recommended that you contact an employment attorney near you. Only an attorney will be able to adequately explain the issues and help defend your rights.