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LAW 529 (123)
Chapter 3

Law 529 Filsinger Chapter 3.docx

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Law and Business
LAW 529
Pnina Alon- Shenker

Law 529 Filsinger Chapter 3 Common-Law Issues Areas of Common-Law Liability 1. Misrepresentation by Job Candidates  No legislation that requires job candidates to be honest during application process  Courts held however that misrepresentations made by employees before they are hired may justify dismissal if the misrepresentations go to the ROOT of their qualifications for the job  False statement has significant impact on the hiring decision, an employer can terminate employee as a result of the misrepresentation even if employee is performing satisfactory  Also applies to false statements that suggest inherent lack of honesty, especially when job requires high degree of trust  Employer should include attestation clause which states that information provided is true and complete to the applicant’s knowledge and that applicant is aware that false statement may disqualify her from employment or be cause for dismissal 2. Wrongful Hiring: Negligent Misrepresentation Misrepresentation by an Employer  If employer makes misrepresentation that is relied on by a prospective employee and that employee suffers damages because of it, the employer may have to compensate the employee  Irrelevant if employer sincerely believed that misleading statements were true Case: Queen v. Cognos Inc (pg 67) (QUEEN WON CASE)  Supreme court rules employer and its representative breached duty of care owed to Queen during hiring process In order for misrepresentation to be binding, following test must be met:  There must be a duty of care based on special relationship between party making representation and the candidate  Representation must be untrue, inaccurate, and misleading  Party making representation must have acted negligently in making misrepresentation  Candidate must have reasonably relied on negligent misrepresentation  Reliance must have caused harm to candidate  An employer owes a duty to a job candidate beyond merely being honest  Must be careful that it does not mislead potential employees  Actions for negligent misrepresentations in hiring are uncommon in Canada as they usually sue for wrongful dismissal  Employer should ensure all info given at pre-employment stage is accurate and complete  Attempts to make job sound as attractive as possible should be avoided if they involve misleading a candidate in any way  Contract should include clause that says all oral representations are void on signing of the contract  Such a clause may override inaccurate statements and simple misunderstandings in hiring process  Reliance on opinions or idle comments does not constitute grounds for a negligent misrepresentation claim  When reasonable person would have detected inaccuracy or when employee was in position to verify the facts of a statement but failed to do so, plaintiff will not be successful Executive Search Firm Misrepresentation  Most misrepresentations made by a recruitment firm are legal responsibilities of the employer  If job firm promises job candidate an annual pay increase of 20% yearly, the representation could bind the employer  Employer’s contract with search firm should specify the position, compensations, and career potential for the job and restrict the firm to providing only that information to job candidates  Contract should also contain an indemnity clause establishing the search firm’s liability in event that it makes a misrepresentation to a candidate Treaty Group Inc v. Drake International Inc (pg.69)  Drake was liable for Treaty’s losses on the basis that both the tort of negligence and breach of contract because it was clear that if Drake properly checked Simpson’s background, Treaty would not have hired her  Damages were limited to 50% as Treaty should have monitored Simpson more carefully 3. Inducement: Aggressive Recruiting  Tort known as inducement, allurement, or enticement occurs wen employee is lured from her current position through aggressive recruiting or inflated promises  Requires significant degree of pursuit, such as repeatedly contacting the candidate and encouraging her to leave her job  Inducement also occurs when employer promises things such as promotion, pay increases etc, that never materialize  When an employee is quickly dismissed and a wrongful dismissal claim is filed, an employee may be entitled to more damages than if there was no inducement at all  Courts look at factors such as how secure previous job was, whether employee rejected other job offers that provided better benefits, or if relocation was required Egan v. Alcatel Canada Inc (p.70)  An employer that overstates the features of a job may find that it has also committed the tort of negligent misrepresentation  Honesty and openness about the job being offered especially in the area of job security and possibilities of career enhancement are essential 4. Restrictive Covenants  Many written contracts restrict the ability of employees to compete with their former employer, to solicit employees or customers or to use the former employer’s confidential information Restrictive covenant: a promise not to engage in certain types of activities during or after employment—that might affect her ability to perform the new job  Seen as restraint of trade and enforceable only if they are reasonable  Employer that is interested in recruiting a candidate who is subject to restrictive covenant should obtain legal advice concerning the covenant’s enforceability and limits that could take place on candidate’s ability to perform job 5. Anticipatory Breach of Contract  Occurs when one party repudiates (rejects) the employment contract— through either its statements or its conduct—before employment begins To be successful in anticipatory breach of contract:  An offer of employment was made  The offer was accepted  The contract was then repudiated by employers (by words or conduct) and  Employee suffered damages as a result  Damages could result from employee’s leaving secure position or relocating in order to take new position  Some instances where employer will not be held liable for anticipatory breach of contract (i.e. driving is essential part of job, and employee loses license after he/she accepts the position) 6. Background Checking: Negligent Hiring  Cost of a bad hire could include potential liability for negligent hiring is the employee causes foreseeable harm to a third party (someone other than employer or employee) Reference Checks  Advisable to get references from variety of people including past supervisors, co-workers, teachers etc  The more the job exposes others to risk of harm, the stronger the employer’s duty to investigate becomes  Standard of Care:( level of diligence one is expected to exercise) imposed on employers is common-law duty of reasonable care  Hiring an employee who will be in position of trust (i.e. daycare monitor) or may be required to use force (security guard) requires high standard of care  Employer should not be limited to making decisions based on only references named by the applicant  Only obtain reference from current employer if conditional offer has already been made in case current employer is unaware that employee is looking for new job  Detailed paper trail should include reference who did not respond and the info from those that did respond  If reference voluntarily provides info about applicant that relates to a prohibited ground of discrimination such as race or sexual orientation, reference checker should indicate that they are not interested in that information Education and Professional Credentials Check  Need to be done especially when applicant is required by law to hold a particular degree or certification as in the case of engineers, accountants, and nurses Credit Checks  If employer wants to check candidate’s credit situation, Ontario Consumer Reporting Act requires that the employer notify the applicant, in writing, of its intention before the check  If candidate requests, employer must notify her of the name and address of credit-reportin
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