Interesting Resume Fraud Case: Employers Learn Expensive Lesson

Nick Fishman

The folks over at HR.BLR.com just published a fascinating story entitled, Court Ponders Implications of Deceitful Resume.  A company employee was terminated when fellow employees alleged sexual harassment.  This gentleman was on an employment contract which included a severance provision.  The employer then investigated the employee and found that he had committed resume fraud to get the job and that he was not entitled to the severance package.

The court ruled that the employer had an opportunity to discover the resume fraud before they extended a job offer and therefore was liable for the severance.  This should serve as a lesson to employers that background checks which include Employment Verifications are vital to ensuring you hire the best candidate for the job.

Court Ponders Implications of Deceitful Resume

What the court said.

The question was whether the man’s alleged fraud was sufficient basis for NMHC to rescind his contract. The appellate court pointed out that the testimony at trial showed that NMHC, its recruiter, and its interviewers failed to ascertain the truth about his employment history, though it appeared to have been readily available via background checks and calls to former employers. The recruiter testified that NMHC had not authorized him to check prior employers. He was only authorized to check references.

Due diligence would have revealed the falsities, the court said, because after the firing, NMHC looked more closely at the  résumé in the hope of showing that the man was terminated for cause and bolstering its claim that he was not entitled to the severance benefits. Based on NMHC’s failure of due diligence, the court agreed that the action to rescind the contract should be dismissed. National Medical Health Card Systems v. Fallarino, Supreme Court of New York, Nassau County, No. 12519/05 (8/25/08).

Point to remember:

This ruling suggests that when employers don’t thoroughly investigate applicants’ backgrounds, they’re in a weak position to try to rescind an employment contract based on a misleading and inaccurate résumé.

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Nick Fishman
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Nick Fishman

Nick Fishman is the co-founder of EmployeeScreenIQ, a leading, global employment background screening provider, and serves as the company’s executive vice president and chief marketing officer. He pioneered the creation of EmployeeScreen University, the #1 educational resource on employment background checks for human resources, security and risk management professionals. A recognized industry expert, Nick is a frequent author, presenter and contributor to the news media. Nick is also a licensed private investigator in the states of Ohio and Texas.
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