Misrepresentations in Employment

Legal obligations can arise during the recruitment stage before you are even hired.  If your prospective employer makes representations to you about the job availability, duties, conditions of work, or compensation, they need to honour those assurances.  If they don't, they can be held liable for misrepresentation.

Employees and employers may both make misrepresentations.  Employees may misrepresent their experience or qualifications, in order to get hired.  Employers may misrepresent the wages or working conditions in order to hire the employee.  Here, we'll discuss pre-hiring misrepresentations made by employers.

What is Misrepresentation?

In the employment context, a misrepresentation generally occurs when your employer makes a pre-hiring assurance which you rely on when deciding whether to work for them.  If it turns out the assurance was false or misleading, there's been a misrepresentation.  If you suffer loss because of the misrepresentation, you can be entitled to damages equal to the loss.

There are three key types of employment-related misrepresentations that can lead to legal action. They are:

  • misrepresentations that violate the Employment Standards Act;
  • negligent misrepresentations; and
  • fraudulent misrepresentations.

Misrepresentations that Violate the Employment Standards Act

Section 8 of the Employment Standards Act prohibits employers from persuading a person to work for them by misrepresenting:

  1. the availability of a position;
  2. the type of work;
  3. the wages; or
  4. the conditions of employment.

Even if the employer's misrepresentation was entirely innocent, if you suffer damage as a result, you can still bring a claim under Section 8.

There are powerful remedies for misrepresentation under the ESA.  One of these is "lost wages".  This is one of the most expansive remedies in employment law: the employer must pay all of your wages, for as long as you suffer wage loss.  So if you remain unemployed and searching for work for three years, lost wages can carry on for three years (up until the date the matter is decided).   Reinstatement is also a remedy for ESA misrepresentation.  The courts cannot award lost wages or reinstatement, this remedy is restricted to Employment Standards complaints.

Negligent Misrepresentations

Negligent misrepresentations occur when there is a special relationship between the person or business making the representation and the person receiving it (including prospective employment relationships).  The "representor" negligently makes an untrue, inaccurate, or misleading representation (this is different from purposely being deceitful).  The "representee" relies on false representation and suffers some loss as a result.

In Feldstein v. 364 Northern Development Corp., the hiring manager represented that the employee could join the employer's benefits plan without medical testing.  The employee had a serious chronic health condition.  On the basis of the representation, he accepted employment at 364 North.  The representation turned out to be incorrect: the benefits provider did require medical testing, the employee failed the test, and he could not benefit from the long term disability plan.  He suffered an extensive loss when he became disabled from working for 12 months and had no disability benefits.

Although the hiring manager did not mean to mislead the employee, he did not make reasonable efforts to verify his representation about testing for benefits.  This meant his representation was negligent.

The employee sued and was awarded damages equal to the LTD benefits he would have received if not for the negligent misrepresentation.

Fraudulent Misrepresentations

Fraudulent misrepresentation is the most serious kind of misrepresentation.  It can lead to severe penalties, as the courts discourage such activity.  Fraudulent misrepresentation occurs when:

  • a false representation was made, and
  • the person making the representation either:
    • knew it was false, or
    • acted recklessly in not checking whether it was false; and
  • the false representation caused the employee to take an action, such as accepting employment; and
  • as a result of that action, they suffered a loss.

These claims are the hardest to prove, as the employee must not only show the statement was untrue, but also that the employer knew it was untrue or recklessly disregarded the truth.  Because of this, fraudulent misrepresentation cases are rare in the employment context.

When to Seek Legal Advice

If a significant promise that was made to you during the recruitment period is not being fulfilled, it is time to seek legal advice.  Perhaps you are not receiving all the elements of compensation you were promised, or your job duties do not match the ones you were led to expect.  In these cases, the members of Yeager Employment Law’s legal team are ready to assist.

Contact our office to book a consultation.  We look forward to helping you.

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