How does resume fraud impact economic damages?
Resume fraud can limit or completely eliminate claims of economic damages in an employment suit, and can even lead to the employee being sued for damages by his or her former employer. To a jury, lying on an application makes a plaintiff looks like an unreliable witness and increases the chances that claims of economic damages will be dismissed. “Many courts are likely to rule that if you lied in order to get hired, you cannot claim to have been illegally fired.”
Steven Levitt of Freakonomics argues there is a correlation between the amount a job requires honesty and the amount of honesty that can be expected from an employee, adding that “the higher employees rise through executive ranks, the more commonly they cheat.”
‘After-acquired evidence’ theory
The ‘after-acquired evidence’ theory describes truths or facts about an employee learned after the person has been terminated, that would have qualified the employer for termination, had the employer known.
For example, imagine a terminated employee claims wrongful termination, and the employer finds out after the dismissal that the employee lied on his or her job application about educational qualifications. The employer can argue that had the job application been accurate, he or she would not have been hired, and that no wrongful termination (and no economic damages) exist in relation to employment that was gained under false pretenses.
‘After-acquired evidence’ could include a range of acts, lies or omissions on an application, such as not listing a former employer, non-disclosure of a felony conviction or termination for tampering with timecards, lying about education or experience. For an employer to disprove any claim of damages based on this type of evidence, the employer must prove that the job application discrepancy was relevant to the job, and that had the truth been known, the candidate would not have been hired.
Pflaster warns employers that in federal court as well as California and New Jersey courts that evidence of resume fraud that comes to light during litigation does not bar an employee from recovering on employment claims. She advises that employers can deter applicants from lying on applications by stating in applications that lying is grounds for termination and requiring applicants’ signatures confirming the veracity of the information provided.
In addition to resume fraud reducing or eliminating potential economic damages in a wrongful termination suit, the employee may sued for damages by the employer.
Case study
Howard Levitt,writing for the Financial Post, offers a illustrative case study in which an employee lied about having earned a Ph.D. on his resume when applying to Coopers & Lybrand Consulting Group. Clark, the employee, was successful in his position, and the resume fraud was only discovered when he was asked to become a partner at the firm, and couldn’t produce documentation supporting his qualifications.
The firm terminated his employment and Clark sued for severance and the bonus stipulated in his contract. The court found that he would not have been hired had he been honest on his resume, as Coopers & Lybrand hires only university graduates, and additionally because professional integrity is a core value at the firm. The court ruled that he was not “entitled to benefit from his fraud.”
Coopers & Lybrand successfully counterclaimed for the cost of replacing Clarke for nine months, as well as for economic damages related to a proposal that was withdrawn during Clark’s employment. Levitt warns that “as the law evolves, employees who lied to get their jobs, not only risk losing them, they also risk considerable additional damages.”
For additional reading, Sonia M. Pflaster of Morrison Foerster provides a historical context of resume fraud and employment litigation. Or get a global perspective and learn how resume fraud impacts damages claims in the UK.
