August 06, 2001 >
Thanks to an economic downturn that seems to have caught them off-guard, many companies are giving new hires the heave-ho before they even start. It's perfectly legal, unless the hires can prove they were misled.

And that is becoming easier to do, because the courts have become more sympathetic to them, workplace experts tell The New York Times.

The key to proving employment fraud is establishing that an employer misled a new hire with false statements, even if the person who made them believed them, according to labor lawyers interviewed by the newspaper. In rare instances, plaintiffs can be entitled to punitive damages.

Allegations of hiring fraud can take convoluted turns because divining an employer's motivation is often impossible. For example, a new hire might be demoted rather than dismissed, making it more difficult to show wrongdoing.

That is what happened to a Connecticut native who moved to Los Angeles from New York in January to fill a financial position for Laundry by Shelli Segal, a designer of sportswear owned by Liz Claiborne Inc.

When the woman arrived, the Times reports, the job was no longer available. Rather than be sent away, however, she was given a menial role. She was fired after she complained.

Several months later, she says, she won a sizable settlement.

The woman, citing a confidentiality clause in the settlement, spoke to the Times on the condition that neither her name nor the name of her lawyer be used. Roberta S. Karp, general counsel for Liz Claiborne, declined to comment.

California has some of the toughest laws protecting new hires, according to Baldwin J. Lee, chief employment litigator for Farella Braun & Martel in San Francisco.

Over the last year, Mr. Lee says, he has represented six clients who moved to the state for jobs that fell through. He won a $1 million settlement for one of them. He cited confidentiality agreements in declining to disclose details.

He based all his arguments, he said, on the 1996 California Supreme Court ruling in Andrew Lazar v. Rykoff-Sexton. There, the court found that a New Jersey company had induced a New York resident to relocate to Los Angeles by "falsely promising he would have a secure job."

"When you have an otherwise good breach-of-employment-contract case, a Lazar claim can be not just an arrow in your quiver," Mr. Lee said. "It can be a hammer you're holding behind your back."

But another lawyer, Charles J. Harder of Los Angeles, said new employees who are dismissed should think twice before taking legal action. If their case is not ironclad, he said, they will be spinning their wheels.
Harder represented Load Media, an Internet entertainment start-up in Hollywood, which was sued by three former employees who had moved to Hollywood from Ohio to begin work there weeks before the steep downturn in the stock market in April 2000.

Their complaint had no merit, he said, because Load Media had not deceived them. Business was thriving when the company made the hires, he said, and it had no way of knowing of the impending market meltdown and subsequent collapse of talks with investors for a new infusion of cash.

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