Avoiding The Whole Truth: The Danger of Negligent Misrepresentations and Wrongful Hiring

Avoiding The Whole Truth: The Danger of Negligent Misrepresentations and Wrongful Hiring

Most difficulties in the employment relationship start at the end. Issues such as wrongful termination can be described as the 'bread and butter' of employment law, but this is far from the only time trouble can arise. 

In fact, employment lawyers can be just as helpful at the beginning of the working relationship. Whether they are drafting employment contracts for the employer, or reviewing contracts for employees before they sign to make sure everything is in order, lawyers can be of tremendous benefit to either side. 

However, the hiring process is not always a smooth one. Hiring managers and HR personnel will often talk about 'fit' - a broad term that describes how well-suited an employee is for a new job. Fit is not always easy to determine, and there are times when employers and their new hires, despite everyone's best efforts, simply will not gel. 

What happens though when any mistakes made during hiring were not quite so innocent? What if the employer led the employee down a so-called 'garden path,' and the position the employee accepts may not be quite what was offered?

This could be a potential case of negligent misrepresentation, or, as it's otherwise known in the employment law world, 'wrongful hiring.' If an employer advertises or promotes a job quite different from what the job actually turns out to be, courts have held that employer could then be on the hook for the employee's decision to come aboard.

To look at an example, it's best to go back and look at the case of Douglas Queen. In Queen v. Cognos, [1993] 1 SCR 87, Douglas Queen was a successful accountant in Calgary who was looking to move into the tech industry in Ottawa. When he interviewed for a position with Quasar Systems (later Cognos, and today a division of IBM) in early 1983, he was attracted by promises of working on a major project with the company. Queen signed the employment contract, which made no such promises as he was offered during his interview, but as far as he knew he was coming to Ottawa to work on the project. Queen actually left his stable accounting job in Calgary, and uprooted his young family cross-country for the journey. 

As it turned out, the project Queen was offered was unlikely to receive the necessary funding, which the employer knew when promoting the project to Queen, and the money was later denied. After being bounced around for a year and a half (including a previous notice of termination), Queen's employment was terminated. He then sued the employer for negligent misrepresentation, claiming that despite his employment contract not making any specific promises, he would not have taken the job if he was not offered this big project. Queen was made false promises, and he claimed that he suffered because of them. 

The first two court decisions established that the employer did make negligent representations (these false promises) to Queen, and that he had relied on them when he accepted the job offer. The Supreme Court was then left to settle two key questions - does the employer have a special relationship with the potential employee in these circumstances, and did they violate the duty of care in that relationship?

In short, the Supreme Court held that the employer was responsible for a 'reasonable' standard of care in the promises made during the job interview. They did not have to guarantee Queen that the funding was in place for the project, nor were they required to show him financial statements. However, to suggest that funding would not have been a problem, when they in fact knew it was unlikely to gain approval, breaches that reasonable standard of care. The interviewer was negligent in his representations made to Queen, and the employer was held liable.

The employer had put forth the argument that while their words may have been misleading, Queen's written employment contract made no false promises and thus served as a disclaimer. The Supreme Court disagreed. The Court restored the trial judge's original award of $67,224.00 - comprising $50,000 in lost income, $252 in costs of obtaining new employment, just under $12,000 in loss on the purchase and sale of his Ottawa home, and an additional $5,000 in general damages for emotional stress. 

Douglas Queen's case may long be over, but the lessons from the Supreme Court's decision remain. Employers have a responsibility to potential employees not just to be honest when promoting a job offer, but they have an additional duty of reasonable care towards the potential employees. In Queen's case, promoting a massive project and recruiting individuals onboard was irresponsible without mentioning the funding had not yet been guaranteed, and especially when the employer knew it was unlikely. 

For a number of reasons, honesty is always the best policy when promoting or offering a job to potential new hires. Aside from the legal obligations, creating an environment of fairness and transparency leads to better workplace morale, and employees are more likely to discuss potential issues as they arise instead of covertly trying to hide problems. The same goes for employees - honesty will always be appreciated by employers, and a lack of honesty can lead not only to mistrust but also to serious consequences depending on the issue. 

Also, employers are always best off putting key terms of employment in writing. Potential new hires will likely ask general questions about the position during a job interview, and employers of course can of course answer them. However, the most important facets of the employment relationship including job description, salary, benefits, bonuses, termination policies, and other key workplace policies (just to name a few) should be dealt with in writing at the time the employee signs their new contract. Employment lawyers are more than happy to help draft or review these contracts to make sure they're both legally compliant and a good fit for your workplace. 

For employees, an employment lawyer can be helpful in reviewing a new job offer. Employment contracts can be long at first glance, and a lot of the text may look standard to the naked eye. That contract though likely contains important elements that dictate the terms of the working relationship, including expectations of employees and what happens when the employment relationship ends. It is important to make sure those clauses are crafted in a way that is fair to employees as well as employers, and a lawyer can help explain contracts, make suggestions or recommendations, and in some cases structure a more favourable offer. 

The bottom line is that it is better to tell the truth then early on, both in job offers and in contracts, than to have to dig your way out of not doing so. Or, as the band Green Day put it best, "talk is cheap and lies are expensive." 

Knock Knock? Not for $3.32 per hour!

Knock Knock? Not for $3.32 per hour!

It's NEVER okay, and the law agrees

It's NEVER okay, and the law agrees