Fraud in the Workplace

Fraud in the workplace is a serious matter. If you believe that your employer has committed fraud and you have suffered losses as a result, you may have a valid claim. But how can you prove that your employer committed fraud against you?

At Gardner Employment Law, we have handled fraud cases. If you believe fraud might be occurring at work, give us a call. 

What is Fraud in the Workplace?

Fraud, as explained on our Services page, is when “another person intentionally misrepresents a material fact that causes you losses.” In the workplace, fraud occurs when your supervisor or boss intentionally misstates or provides false information to you as an employee and you justifiably rely on that information. An act is intentional if the person knew at the time that the statement was false and intended to cause harm by making the statement or knew with substantial certainty that harm would occur.

Here are some of common types of fraud that employers commit:

• False statements about salaries or benefits
• Promises of bonuses that will not be given
• Mischaracterization of promotions
• False explanation of documents that you must sign
• Misleading claims to shareholders or investors

As explained, these actions must be intentional. The person knew at the time that the statements were false and intended harm to the employee. While these situations do occur from time to time, they are very difficult to prove.

Negligent Misrepresentation

In addition to fraud, as explained on our website, the law recognizes a lower level of a claim called negligent misrepresentation. This claim is similar to fraud. In this instance, the manager or person with authority to speak for the company made a false statement, either by act or omission, but failed to determine whether the information was accurate when he should have done so.

In this claim, you must show that another party made a representation to you in the course of a business transaction that was false, that the false information was supplied for your guidance, that the other party did not exercise reasonable care in obtaining or communicating the information, and that you justifiably relied on the false information causing damage or loss.

A claim of negligence probably is more common than intentional fraud.

Do Employees Have Protection When They Report Fraud?

Yes! A common misconception is that employers hold all the power and that no one will listen to your concerns. This might make you hesitant to report fraud if you feel that your job is on the line. However, know that you have options. For example, if your employer commits financial fraud you might qualify as a “whistleblower.” Based on the Sarbanes-Oxley Act of 2002, an employee may assert a valid claim as a whistleblower by reporting accounting or securities fraud by the employer. That federal law protects individuals who report securities violations or fraudulent financial activities to a federal agency.

This means that if you have proof that your employer engages in illegal business activity, you can make a claim and be protected from retaliation.

Whistleblower protection can embolden you to make the right decisions if you discover financial fraud occurring at work. At Gardner Employment Law, we understand your fears and concerns—which is why we use the facts and the law to protect our clients against unjust repercussions for reporting fraud.

How Can I Bring a Fraud Claim Against My Employer?

There are two things you need before you can assert a fraud claim against your employer: evidence and legal expertise. Keep documentation of any suspicious activities if there are  warning signs that management may be committing fraud. If you decide to take action, you will need to prove that the fraud was intentional. You can prove intent through evidence that the employer knew the statement was false or that they made the statement recklessly.

Regarding state laws, the laws pertaining to fraud are different in the various states. Texas tends to be pro-employer in its laws.  For example, in Winters v. Houston Chronicle, the Texas Supreme Court held that under Texas law there is no basis for a whistleblower claim in the private employment setting.  In that case, Mr. Winters alleged that he was fired because he reported illegal activity of his fellow employees to upper management.

The Texas Supreme Court explained that there is no recognized cause of action in Texas cause of action for private employees who are discharged for reporting illegal activities and that the doctrine of at-will termination applied.

There is, however, a Texas statute that protects governmental employees who report illegal activities at work.  Texas’ Whistleblower Act prohibits a state or local governmental entity (including a school district) from taking adverse employment-related action against an employee “who in good faith reports a violation of law by the employing governmental entity or another public employee to an appropriate law enforcement authority.

When collecting evidence of suspected fraud, ask yourself: what is the nature of the fraud? How widespread is it? Who is benefiting from the fraud? These matters can be overwhelming without proper guidance. Once you have gathered all vital information, contact an experienced attorney that can appropriately represent you and advise you on your rights.

Contact a Legal Expert

Workplace fraud schemes by employers should not be tolerated. Although fraud is rare, it does happen.  At Gardner Employment Law, we are here to offer our expert advice to help you determine whether you may have a valid claim. Contact us today.