False advertising in order to hire people

Question

A corporation is in desperate need of extra help during the holiday season. So it tells employees that if they come to work on time every day, they'll get a weekly bonus of $200, beginning October 1. It also takes its pitch to prospective employees on the radio, promising them the same bonus if they hire on.

The catch? They won't begin paying the bonus until November. However, it will be retroactive.

Towards the end of October, the company says the bonus won't begin until October 22. People who hired on three weeks earlier are thus cheated out of $600 they had been promised. It's also revealed that the bonus will be heavily taxed, making it just $150 a week.

In addition, the company now says the bonus can be modified or terminated at the company's whim. Thus, people who hired on expecting to get a $200 bonus for eight weeks are now cheated out of the first three weeks and possibly out of the last nine weeks. For all they know, they might get one payment of $150.

The union (Teamsters) won't do a thing about it, claiming it's not a contract issue. The Department of Labor passes the buck, saying "This is a problem you should discuss with your union."

Would it be possible to get help from some other agency or perhaps file a class action lawsuit?

First, I need to know what sort of crime I just described is. Would you just call it false advertising? Someone told me it's a classic example of bait-and-switch, which would take it out of the Department of Labor's jurisdiction.

Answer 1

This isn't false advertising in any meaningful legal sense; that would involve the advertisement of goods or services for sale, not an offer of employment.

What you do seem to be describing would be a breach of contact: they made an offer, employees accepted, and not they aren't providing the payment they promised. Although you could get a class action together for certainly labor-law violations, you probably couldn't make it happen for the contract case.

The fact that they didn't mention taxes would not be relevant, and no one would collect damages for the difference between the untaxed and taxed bonus amounts.

There may be other agencies that could help, including a state department of labor.

Answer 2

What is happening is possibly deceptive advertising or hiring practices, or breach of contract. But you haven't given enough details or jurisdiction to fully determine that.

The best thing to do is find a lawyer by Googling for "free legal aid" in your area and finding an organization that helps with labor law; or calling a labor lawyer who advertises free initial consultations.

A lawyer will know the local and state laws, know after talking with you and the corporation whether this is a situation of breaking an employment contract, deceptive advertising or another violation.

The lawyer may not in the end file a lawsuit on your or the others' behalf, but the fact that an attorney contacts the corporation and interviews employees will put pressure on the corporation to either not break the law or act more ethically in hiring procedures, and to adhere to their original agreement with employees.

The fact that a lawyer is involved could also force the state Department of Labor and the union - if these are union jobs - to act.

One other option is to get the local press involved; they may do an article and that publicity could bring pressure on the corporation. But don't attempt to write about the situation yourself unless you are very careful to not libel anyone.

Answer 3

As others have said, there is a claim of breach of contract. But I will elaborate, should you decide to argue your position in administrative proceedings/remedies or in court. Equally important is that your situation will meet the prima facie elements of a claim of fraud if you as plaintiff are able to prove that the defendant employer "made a false representation intending thereby to induce [the] plaintiff to rely thereon and that the plaintiff justifiably relied thereon to his or her damage", McNulty v. Chip, 116 A.3d 173, 182-83 (R.I. 2015).

But first I should clarify that the employer's deceitful or fraudulent practices strictly speaking are not a crime. Even if these practices were categorized as such in your jurisdiction's penal code, only the prosecutor would have "standing" to proceed in criminal court against the employer. At most, you and any co-plaintiffs have "standing" to sue the employer in civil court for the employer's unlawful or inequitable acts.

Here, the employer committed to a weekly bonus. Absent a mutually agreed clause (whether it was timely agreed upon, or agreed to be retroactive) permitting a longer delay, the parties ought to follow common, industry-wide practices. It is unreasonable for the employer not to pay a bonus of that magnitude within the next period (that is, a week, or a biweekly period) upon which it accrued. This is in contrast to an hourly wage, where it would be impractical to pay each work hour within the next hour.

Taxes aside, the employer is not allowed to reduce or eliminate the bonus for labor that was hired and performed under the bonus incentive. Doing so would squarely fit the elements of fraud as explained in the McNulty opinion. However, unless the contract forces the employer to maintain its bonus policy for a minimum duration, the employer can modify or terminate it only going forward (and hence each employer may decide whether to stay or quit).

The employer also committed to October 1 being the effective date of the incentive program. If the employer belatedly pays the bonus, his delay would be actionable only if you are able to prove that the employer's delay caused you losses which are reasonable, cognizable, and verifiable.

For instance, an allegation of the type "I got my bonus too late, so I was unable to buy my girlfriend a gift, and therefore she broke up with me" is neither reasonable nor legally cognizable as a loss. By contrast, if the bonus delay causes you penalties for making late payments or defaulting elsewhere, then the employer might be held liable for his delay (at least where the delay is unjustifiable).

If you decide to proceed against the employer, it is important that you as well as any prospective co-plaintiffs "exhaust administrative remedies" prior to filing suit in court. This is because, in one or more jurisdictions, bonuses are explicitly defined as fringe benefits and thus are unequivocally within the scope of statutes such as the Michigan Payment of Wages and Fringe Benefits Act. See MCL 408.471(e). Although this has not always been the case, nowadays Michigan judges are adamant that the verb "may" in MCL 408.481(1) means "shall" and that therefore it has a connotation of being "mandatory".

Thus, not exhausting (prior to suing in court) your administrative remedies pursuant to MCL 408.481 would cause your one or more of your claims to be dismissed in Michigan courts. That will continue to hold till Michigan judges bother to undust their dictionary and restore the prior case law on this issue.