An employee may have a claim for fraud or misrepresentation if her employer makes
a false statement for the purpose of inducing the employee to rely on that statement in order
to take a particular action, the statement turns out to be false, and the employee is harmed by
relying on the false representation. A typical claim involves misrepresentations in the hiring
process concerning length and terms of employment, such as a promise of a minimum term
of employment, job security or bonus compensation, in order to induce a job applicant to take
Employers must exercise reasonable care in the selection and retention of employees.
This is particularly true if their employees come into contact with members of the public as
part of their jobs. An employer breaches its duty if it knows, or should have known, of
problems that indicate unfitness and fails to investigate, discharge, or reassign the employee.
As a result, employers are well advised to conduct background checks of applicants,
particularly if the employee will deal with customers, cash or other sensitive matters. See
Part II, Section 2.1(B)(2) below.
Employers and employees can modify the at-will employment relationship by
contract. The formation of a contract can be intentional or unintentional. Contractual
obligations can arise from written employment agreements and offer letters as well as pre-
hire oral statements or promises. In addition, implied contracts may be formed by promises
or statements made in handbooks, employment policies and practices and the employer’s
conduct. The most common contract claims will be discussed briefly below.