Workplace Fraud Claims: A Guide to Protecting Your Rights

Workplace fraud claims are 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 Workplace Fraud?

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.

Common Types of Workplace Fraud Claims

• 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

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 Workplace Fraud Claims

In addition to fraud, 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.

To assert a claim of negligent misrepresentation, you must show that:

1. Another party made a false representation to you in the course of a business transaction.
2. The false information was supplied for your guidance.
3. The other party did not exercise reasonable care in obtaining or communicating the information.
4. You justifiably relied on the false information, causing damage or loss.
5. A claim of negligence is more common than intentional fraud.

Do Employees Have Protection When They Report Workplace Fraud Claims?

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.

If your employer commits financial fraud, you might qualify as a whistleblower. Under 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. This federal law protects individuals who report securities violations or fraudulent financial activities to a federal agency.

Additionally, the Dodd-Frank Act provides further protections and incentives for whistleblowers. Under this law, employees who report financial misconduct to the Securities and Exchange Commission (SEC) may be eligible for monetary awards if their tip leads to a successful enforcement action. Furthermore, the False Claims Act protects employees who report fraud against the government, such as false billing or contract misrepresentation.

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. Protections include job security, financial compensation, and even anonymity in certain cases.

However, not all whistleblower protections extend to private sector employees. Some state laws vary in their scope of protection, with states like Texas offering limited safeguards for private employees. This is why consulting a legal expert before reporting fraud is crucial. Whistleblower protection can embolden you to make the right decisions if you discover financial fraud occurring at work.

How Can I Bring a Workplace Fraud Claim Against My Employer?

There are two things you need before you can assert a workplace fraud claim against your employer: evidence and legal expertise.

Steps to Take if You Suspect Workplace Fraud Claims

1. Keep Documentation: Maintain records of any suspicious activities, including emails, pay stubs, or communications with management.
2. Determine Intent: To prove fraud, you must show that the employer knew the statement was false or acted recklessly.
3. Understand State Laws: Laws regarding fraud vary by state. Texas, for example, tends to be pro-employer.
4. Consider Whistleblower Protections: Some states, like Texas, do not provide whistleblower protection for private employees, but there are protections for government employees.
5. Consult an Attorney: Once you have gathered all vital information, contact an experienced employment lawyer who can represent you and advise you on your rights.

Understanding Texas Laws on Workplace Fraud Claims

Texas laws tend to favor employers. In Winters v. Houston Chronicle, the Texas Supreme Court ruled that private employees do not have a recognized cause of action for whistleblower claims in the private sector. However, Texas’ Whistleblower Act protects governmental employees who report illegal activities at work.

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.

Contact a Legal Expert About Workplace Fraud Claims

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.