New England Biz Law Update
The practice of recruiting, and actually hiring, the most qualified candidate for a job should be one that is painstakingly undertaken by employers. When interviewing candidates, employers should pay particular attention to objective criteria such as previous work history, education and skills, and subjective criteria such as general “fit” within the organization. This effort is well spent.
Where many companies fall short in the recruiting process is by failing to completely research a candidate’s background before making the employment offer. It is the failure to undertake the appropriate due diligence in advance of the hiring decision that often results in litigation that could have easily been avoided.
The important lesson to learn from this article is that a little due diligence during the hiring process can go a long way to avoiding larger issues in the future. No matter how sure you are that you have found the perfect candidate, a simple reference check and confirmation of the asserted qualifications may ensure a great hire for your organization and avoid unnecessary and costly litigation.
If It Seems To Good To Be True, It Probably Is
Imagine that you are the vice president of sales for a multi-million dollar company. A candidate’s resume comes across your desk. The candidate states in his resume that he led his department in sales for the past 20 years and he is a Nobel Prize winner. You might be thinking, “stop the presses, I have to hire this person immediately!” Hold on. You better make a careful check of the candidate’s references.
On July 20, 2003, the Chicago Tribune reported that a recent survey of 200,000 resumes reviewed by HireRight, an employee-screening company, revealed that 80 percent of resumes contained at least one factual inaccuracy. Such statistical evidence should serve as a lesson that a thorough reference check is as important as finding an employee with all, at least in theory, of the employer’s desired skills.
Often times, employers will find that indications that a candidate would later turn out to be a “problem employee” would have been evident if a routine review of references was conducted before the employment offer.
A good example can be found in the case of Jacobs v. Cider Mill Farms, Inc., et al. 1999 U.S. Dist. LEXIS 21296 (D.C. N.J. 1999). In Jacobs, the plaintiff, after being terminated because she failed to meet her sales goals, sued her former employer alleging sexual harassment and gender discrimination in New Jersey federal district court.
The defendant denied these allegations. Before the plaintiff’s deposition, the defendant –simply calling the college the plaintiff claimed to have attended – learned that the plaintiff never earned the college degree she described in her application and resume. In fact, the plaintiff only took a handful of classes.
During the plaintiff’s deposition, the defense questioned her on her educational background – including the year she graduated, the degree conferred, and even where she lived while she attended school. Ultimately, the case was disposed of by way of summary judgment in favor of the defendant.
While the defense successfully undermined the plaintiff’s credibility by catching her in a very embarrassing lie, the defendant would not have hired the plaintiff in the first place, and by extension, her claim never would have been filed, if the employer had simply confirmed her objective qualifications before making its employment offer. A five-minute phone call to the college’s registrar’s office would have avoided thousands of dollars of attorney’s fees, costs, and the loss of valuable senior executives’ productivity.
Be A Private Investigator
Employers should request the following information from all applicants to effectively check employment references: a complete employment application; a resume; a list of references; and the employee’s signature on a document that releases the employer from liability when checking references, which is often included on the bottom of the employment application. Employers should never accept a resume in lieu of a completed employment application.
Some employers also require a credit check before an offer. Employers should be aware if they want to require the consumer credit report, it must follow federal requirements before any inquiry is made. This includes written notification to the applicant that a consumer credit report will be required and if the applicant submits his or her application by mail, the applicant must be notified in writing if he or she is denied a job based on information contained in the report. (315 U.S.C. §§1681d and 1681m.)
Litigation Tips
If litigation occurs, in-house counsel should review the former employee’s application and resume immediately after he or she files a lawsuit because of the “after-acquired evidence” doctrine.
In McKennon v. Nashville Banner, the plaintiff, a 62-year-old employee, sued her employer claiming age discrimination after she was discharged during a reduction-in-force (RIF). 513 U.S. 352 (1995). During the discovery phase of the litigation, the employer learned that before the RIF, the plaintiff copied several of the employer’s confidential files.
The employer promptly sent the plaintiff a letter terminating her for misconduct and sought to throw out her age discrimination claim based upon the plaintiff’s misconduct, which it learned of after the plaintiff brought the litigation claims.
The court held that after-acquired evidence of the plaintiff’s misconduct could not be used to dismiss her age claim. The Court determined, however, that the plaintiff’s damages were capped from the date of the adverse action (in McKennon’s case, the date of her termination), to the date that her misconduct was ultimately discovered.
Applied more broadly, McKennon teaches us that employers can seek to narrow considerably what is at stake in an employment dispute by quickly discovering a material misrepresentation in a resume or by unearthing some serious violation of company policy that occurred before the employee’s departure.
For example, in Smith v. Charter Township of Union, et. al., a Michigan court found that an applicant who falsified his qualifications on his resume, would only be entitled to a limited amount of back pay if he prevailed in a race discrimination claim, because his damages would be capped from the time the applicant began working until the time the employer would have reasonably found out about the misrepresentations. 227 Mich. App. 358 (1997).
In a breach of contract claim, a material misrepresentation on a resume may completely bar a plaintiff’s damages if the employer relied on the misrepresentation when making its hiring decision.
For example, In Schiavello v. Delmarva Systems Corporation, 61 F.Supp. 2d 110 (D. Del. 1999), the plaintiff, a former vice president of sales at Delmarva Systems Corporation, sued his former employer for breach of an employment contract because of the employer’s alleged failure to allow the plaintiff to earn incentive pay. After conducting an internal investigation, the employer learned that that the plaintiff made material misrepresentations on his resume and job application concerning his previous employers and salary.
The employer argued that it relied on these misrepresentations when making its employment decision. The court held that if the plaintiff did, in fact, make material misrepresentations on his resume and/or job application, these misrepresentations would act as a complete bar to his recovery.
Bret A. Cohen and Yvette Politis are labor and employment attorneys at Pepe & Hazard. The labor and employment law practice group is dedicated to client service through a preventative approach to employment disputes and cost-effective litigation management. Bret and Yvette have extensive experience in executive compensation disputes; non-compete litigation; defense of employment discrimination claims; wage and hour issues; and general employment counseling. Bret can be reached at [email protected] and Yvette can be reached at [email protected].
