It’s illegal in California to induce someone to relocate to take a job based on misrepresentations about the position. This situation typically arises when an applicant moves to a new city for a job that doesn’t work out and then claims the employer made false promises about the opportunity. Now, in a new twist, an employer was sued—and socked with a $1.9 million verdict—when a former employee claimed he was lured into relocating and then fired in retaliation for complaining about the employer’s business practices.
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Employee Complains About Sales Practices
Thomas Heshion was a salesman for Auto-by-Tel Corp., an online car-buying service based in Newport Beach. He was responsible for signing up auto dealerships to be the exclusive source for car purchases in specified zip codes.
Trouble started when, according to Heshion, his supervisors asked him to double-sell territory already under exclusive contracts. Heshion’s attorneys, Ronald Hodges and Michael Kelley of Marshack, Shulman, Hodges & Bastion in Irvine, told CEA that Heshion refused, believing double-selling violated California’s unfair business practices law. Heshion then reported the problem to the company president, who allegedly said he would take care of it and Heshion shouldn’t worry. A few months later, Heshion reportedly complained again because he was concerned that the company’s Securities and Exchange Commission filing didn’t adequately disclose the alleged double-selling.
Employee Relocates, Then Gets Fired
About a month later, Auto-by-Tel asked Heshion to relocate to Texas to work with a new company it had acquired. Heshion claimed Auto-by-Tel led him to believe he would be promoted to an executive-level position with a higher salary. His attorneys told CEA that he was put in charge of sales but didn’t get the promised executive position or salary. Within two months on the new job, he was fired.
Employer Hauled Into Court
Heshion took Auto-by-Tel to court, claiming he was fraudulently encouraged to relocate and then terminated in retaliation for his complaints. He argued that the company’s actions violated a California Labor Code provision that makes it a crime to misrepresent the length of employment, type of work, compensation or other aspects of a job to induce an applicant or employee to relocate. He also claimed he was wrongfully terminated in violation of public policy for reporting the alleged unfair business practices.
Auto-by-Tel denied that it had engaged in unlawful double-selling, asserting that its sales practices were permissible under the contracts it had with dealerships. Auto-by-Tel also denied that it had improperly persuaded Heshion to relocate. What’s more, according to the company’s attorney, George Abel of Paul, Hastings, Janofsky & Walker in Los Angeles, Heshion was terminated for legitimate reasons. The company reportedly discovered after Heshion relocated that he had allegedly engaged in unauthorized sales practices while in California.
An Orange County jury sided with Heshion, awarding him $1.9 million, including $1.5 million in punitive damages.The company has filed an appeal.
How To Avoid Disagreements
To protect yourself from similar lawsuits, avoid making misrepresentations or false promises to convince an employee or applicant to relocate. Even small misstatements can set you up for disputes down the road. Be straightforward in your communications about what a job entails and document what was said. Penalties for violating the California Labor Code provision barring fraud in relocations include doubling the employee’s damages such as lost wages, a fine of up to $1,000 and six months in jail.
This case also demonstrates that it’s important to take all reports of illegal or questionable activities seriously and promptly investigate. Even if the complaint proves unjustified, never retaliate against the complaining employee.