Legal Remedies in California for Employees Fraudulently Lured into a Job

by | January 6, 2021 | Civil Litigation, Employment Law

Ever since the Gold Rush of the mid-19th century, California has attracted a large number of job seekers.  Silicon Valley is home to some of the world’s most valuable technology companies, and the Los Angeles area dominates the national media and entertainment industries.  With these booming sectors come enticing professional opportunities that appeal to people all over the globe.

But what happens when promised opportunities fail to materialize?  Take the facts alleged in Lazar v. Superior Court, 909 P.2d 981, 983–84 (Cal. 1996).  Andrew Lazar lived and worked in Long Island, New York for decades.  He worked his way up within the family-owned restaurant equipment business and became president.  Mr. Lazar earned a good salary and enjoyed his life in New York with his wife of 21 years and his two children, ages 17 and 15.  One day, the vice president of a company called Rykoff-Sexton, Inc. contacted Mr. Lazar to persuade him to come work in Los Angeles as Rykoff’s West Coast general manager for contract design.  During the recruitment process, Mr. Lazar told Rykoff that he was concerned about relocating to Los Angeles since the move would entail relinquishing a secure job and separating his children from their friends at an important time in their lives.  As a condition of accepting the job, Mr. Lazar obtained Rykoff’s assurance that his employment would be secure and would involve significant pay increases.  Rykoff further represented that the company was financially strong.  Relying on these promises, Mr. Lazar resigned from his job in New York, bought a new home in California, and moved his family there.

There was just one problem: all of Rykoff’s promises were false.  The company had, in the immediately preceding period, experienced its worst economic performance in recent history.  To make matters worse, Rykoff was planning an operational merger that eliminated Mr. Lazar’s position.  As a result, Mr. Lazar lost past and future income, lost contact with the New York employment market, became burdened with payments on Southern California real estate that he could no longer afford, and, of course, experienced significant emotional distress.

What are the legal options in California for someone in Andrew Lazar’s position?

California Labor Code § 970 prohibits employers from inducing an employee to relocate to, from, or within California based on false promises about the “kind, character, or existence” of work, the “length of time such work will last,” or the compensation to be provided in the role.  Cal. Lab. Code § 970(a)–(b).  Other causes of action that allow for recovery in these situations include fraudulent inducement, intentional misrepresentation, promissory fraud, promissory estoppel, intentional interference with prospective economic advantage, and breach of the implied covenant of good faith and fair dealing.  Labor Code § 970 is especially attractive, however, because it entitles the aggrieved party to double damages.  See Cal. Lab. Code § 972.

An important advantage of these causes of action is that they permit recovery of lost earnings that the fraudulently induced employee would have earned at his or her old job.  So, in Lazar v. Superior Court, the California Supreme Court held that Andrew Lazar could “seek damages for the costs of uprooting his family, expenses incurred in relocation, and the loss of security and income associated with his former employment in New York.”  909 P.2d at 992.  In Toscano v. Greene Music, 21 Cal. Rptr. 3d 732 (Cal. Ct. App. 2004), the Court of Appeal for the Fifth District of California held that “a plaintiff’s lost future wages from the former at-will employer are recoverable under a promissory estoppel theory as long as they are not speculative or remote, and are supported by substantial evidence.”  Id. at 737.  And in Helmer v. Bingham Toyota Isuzu, 29 Cal. Rptr. 3d 136 (Cal. Ct. App. 2005), the Court of Appeal for the Fifth District of California held that “future lost income is recoverable by an employee pursuing a claim of promissory fraud against an employer who induces him to leave secure employment by knowingly making false promises regarding the terms of his future employment.”  Id. at 143.

If you have been lured into a job on false pretenses, you should consult with an attorney to determine what your legal options are.  Sanford Heisler Sharp has experienced employment lawyers in New York, Washington, DC, San Francisco, San Diego, Tennessee, and Baltimore.