Recruiters naturally tend to be Sirens. Companies are eager to get the best help they can. In this process, there is a natural tendency to downplay corporate problems and to over-state the benefits of employment. Where companies are not particularly ethical puffing or effusive opinions can turn into misrepresentation.
If you are recruited based on a misrepresentation, you may have a legal remedy. One problem with a fraud claim is proving that the statements were intentionally or recklessly false when made. Remember, too, opinions generally don’t count, only fraudulent facts. Verbal or written promises may be enforceable in many states without a formal contract if the employee relies on the promise in accepting a position. However, if the promise is too vague, it will not be enforceable. The following are examples of recruiting promises that are NOT likely to give rise to enforceable legal claims:
- “You should be able to make millions in the future selling our widgets.”
- “Based on your track record, you should have a great future with our company.”
- “The sky is the limit with respect to your earning potential here.”
- “This is a wonderful career opportunity.”
- “You will have job security here.”
- “As soon as we can our stock incentive plan prepared, we will be providing you with stock options.”
By way of contrast, depending on the state in which you reside, the following types of promises, if broken or knowingly false, and made by an appropriate corporate representative may be enforceable:
- “You will have a guaranteed job here for a year, absent some economic disaster.”
- “We will pay you a bonus of 50% of your salary if you are still employed after 12 months.”
- “You will not be terminated without cause.”
- “Our product is already in production and we have over 10,000 customers who have already contracted to purchase our new product so you should do very well here on our commission plan.”
- “The company is making a commitment to the new division for a minimum of three years so you don’t need to worry about the division being shut down prior to that time period.”
- “You will receive 10,000 stock options within 90 days at a guaranteed strike price of $3.00 per share to vest immediately.”
Avoiding Problems from Recruitment Misrepresentations
- Be careful of rosy promises. You will want to believe them because they make you feel good. Stay skeptical;
- If you are dealing with a new company or a new division, be careful;
- Check out the financial condition of the company independently;
- Be particularly suspicious about the possibility of uninformed representations by corporate recruiters. Check out these representations with company managers before you rely on them;
- Confirm in a friendly writing any promises or other statements you rely on. This includes promises of job security and financial arrangements;
Be wary of:
- Representations about the company’s financial condition;
- Promises relating to future bonuses, options, and other benefits;
- Promises relating to any special terms and conditions of employment;
- Promises relating to corporate commitment to any new department or division for which you are recruited.
- When you confirm the promise, recite your concerns on which you are relying and what you are giving up. For example indicate, “Your promise that the Company will not close the new division for at least the next 12 months is very important to me because I am requiring my family to relocate and that will cause considerable hardship.” Or specify, “Your promise that I will not be terminated without cause prior to the vesting of my options is key to my taking this position because I am leaving a secure position and forfeiting valuable stock options that would otherwise vest in 60 days to take this job with you.”