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Misleading your employees risks ‘career fraud’ claim

by on
in Human Resources

After General Dynamics reached a settlement in a class-action overtime case, other employees at the company were given the opportunity to "opt in" on the lawsuit in late 1993.

But managers allegedly told Philip Williamson and other longtime workers that joining the lawsuit would be "career suicide" and "cutting their balls off." The company told these employees that rumors about the planned closing of the plant weren't true. As late as April 1994, executives were still telling employees that there would be work available "all the way into the year 2000." Williamson and the other workers decided not to join the overtime lawsuit. But on July 1, 1994, after the deadline passed for joining the suit, the company announced that it was closing the plant.

Williamson and the others sued the company for "career fraud." General Dynamics argued that the Fair Labor Standards Act pre-empts such common-law fraud claims. But a federal appeals court sided with the workers and allowed them to sue under state antifraud law. (Williamson v. General Dynamics Corp., No. 98-55783, 9th Cir., 2000)

Advice: Don't make promises you have no intention of keeping, especially if they will hit employees in the wallet.

If you're facing a wage-and-hour case, expect that the attorney will go through your company's statements looking for any basis for a "career fraud" or "wage fraud" claim that will drain even more money out of you. While courts may not hold employers to vague promises, the employees in this case were able to point to specific assurances of job security.

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