Applicant misrepresentation creates unique issues regarding the company's rights and obligations where the employ- ment contract is not explicitly employ-.
Applicant Misrepresentations in Resumes and Interviews in Canada Steven L. McShane* Steven L. McShane is an Associate Professor in the Faculty of Business Administration at Simon Fraser University in Burnaby, British Columbia. © 1994 Bv Steven L. McShane
Human resource managers and their legal counsel are increasingly concerned about the level of applicant misrepresentation in resumes and employment interviews. According to recent surveys, onethird of all resumes include falsehoods, most commonly regarding the applicant's time in the previous job, level of education, salary, job responsibilities, and job title,^ While many of these misrepresentations involve minor exaggerations of fact, others could result in a disastrous selection decision. By choosing the wrong person, the company bears not only the costs of an ineffective selection process, but also costs arising out of the employee's subsequent poor performance and termination. In some cases, these costs are substantial. Applicant misrepresentation creates unique issues regarding the company's rights and obligations where the employment contract is not explicitly employment-at-will. For example, does the company have just cause to fire employees who falsify their resume or employment interview even though the misrepresentation does not result in poor performance? What rights are involved where the falsehood involves an opinion, such as the job candidate claiming that he or she is able to handle the job? Does a certification statement on the employ'The author is sraieful lo Lenard Reid and Michelle Berner for Iheir valuable research assistance and to the Soi:ial Sciences and Humanities Research Council of Canada for funding this research ' A. A. Sloane, "Countering Resume Fraud Within and Beyond Banking: No Excuse for Not Doing More," 42 Labor Law Journal 303-310 (May 1991).
Misrepresentations
ment application form aid the employer's defense? These and other questions are of considerable importance in situations where the employer is bound by statutory or contractual agreement with the employee. They are particularly important in Canada where most nonunion employment relationships are governed by the "reasonable notice" rather than "employment-at-will" doctrine. This article analyzes Canadian common law wrongful dismissal cases involving applicant misrepresentation. The discussion is framed in terms of the employer's defenses for dismissing employees where applicant misrepresentation is alleged as well as the limitations or contingencies to these defenses. While the conclusions are directly pertinent to Canadian employment situations, they may also be instructive to human resource managers and their legal counsel in other jurisdictions and situations where employment-at-will has been limited. We begin with a brief overview of Canadian common law wrongful dismissal principles. Canadian Wrongful Dismissal Principles A basic principle in Canadian common law is that each employee has a contract with his or her employer.^ Some employ^ D. Harris. Wrongful Dismissal (1990 Update) (Toronto; Richard DeBoo Ltd.; H. A. Levitt. The Law of Dismissal in Canada, 2nd ed. (Aurora, Ont: Canada Law Book, 1992); E. Mole, Tbe Wrongful Dismissal Handbook (Markham, Ont; Butterworths. 1990).
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ment contracts are written, but most consist only of implied terms based on the intentions of the parties, their past employment practices, and certain basic common law principles. The employment relationship has an indefinite term unless the parties agree otherwise. In Canada, this means that the employer may alter or end the relationship for any reason—or for no reason at all—by giving the employee reasonable notice or equivalent severance. Reasonable notice is an extremely ambiguous issue, however, and has led to many lawsuits even where the employer has attempted to provide advance notice or severance,^ Courts have decided reasonable notice as high as 26 months.'' Wrongful dismissal may involve outright termination of an individual's employment, or it may take the form of constructive dismissal. Constructive dismissal occurs when the employer unilaterally changes a fundamental condition of the employment relationship and the employee seeks damages for breach of contract. The damages awarded for either constructive or wrongful dismissal represent the amount of earnings that the employee would have received during a period of reasonable notice. In rare circumstances, the plaintiff is also awarded mental distress and/or punitive damages. Courts do not have the power to either reinstate the employee or, in cases involving constructive dismissal, to force the employer to return to the original employment conditions. It is unnecessary to provide reasonable notice or an equivalent severance if the employer has just cause to dismiss the employee or alter the employment rela^ S. L. McShane, "Reasonable Notice Criteria in Common Law Wrongful Dismissal Cases," 38 Relations IndustrieHes 6t8-633 (1983): S, L. McShane and D, McPhillips, "Predicting Reasimable Notice from Canadian Wrongful Dismissal Cases," 41 Induslrial and Labor Relalions Review 108-117 (1987); T. H. Wagar and K. A. Jourdain, "The Determination of Reasonable Notice in Canadian Wrongful Dismissal Call's," 43 Labor LUK-Journal 58-fi2 (January 1992).
tionship. Just cause includes evidence of misconduct, unfaithful service (such as conflict of interest), or incompetence. Just cause is often difficult to prove, however, and does not include layoffs even when the employer must reduce payroll costs due to an economic downturn. Not everyone employed in Canada is protected by common law wrongful dismissal. Employees residing in the province of Quebec are governed by a distinct common law founded on civil law, but the principles are very similar to those found in Canadian common law. Canadian courts have decided that unionized employees are excluded from common law wrongful dismissal actions because they are protected by labor laws and grievance procedures. However, one court recently allowed union members to seek common law wrongful dismissal damages because the employer altered conditions promised outside the collective agreement.^ Finally, senior government officials are employed "at the pleasure of the Crown," meaning that they are subject to employment-atwill rather than reasonable notice. Incompetence Defense
Canadian wrongful dismissal cases involving applicant misrepresentation invariably occur because the employee was dismissed without notice and sues the employer for breach of contract. The most common reason for dismissal is that the employee performed poorly on the job. It is generally difficult to prove incompetence because companies must provide substantial evidence that the employee's performance was below agreed standards and that he or she received warnings. monihs as the upper limit of reasonable notice: Sard v. Tomenson Saunders Whkchcad Lid. (1987) 16 CCEL 223. However, 26 months was awarded in Websicr because he was induced to leave a secure union position and required 26 months to receive special pension benefits. ^ Wainwright v. Vancouver Shipyards Co. (1987) 14
BCLR(2d)247,
•" Websier v. Briiish Columbia Hydra & Power Aulhoriiy 11990) 31 CCF,L 224, Canadian courts have generally set 24
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January, 1994 Labor Law Journal
coaching, an opportunity to improve, and other conditions.^ The incompetence defense is even more difficult to plead where the employee's poor performance can be traced to the company's poor selection decision. For example, when an organization does not take reasonable care to ensure that the successful candidate possesses the relevant competencies or experience, then it cannot subsequently rely on incompetence as grounds to dismiss the person without notice.'' In contrast to the general situation, companies enjoy a relatively high level of success with the incompetence defense in cases involving applicant misrepresentation. The easiest defense occurs where the employee's incompetence is objective, the company has provided warnings, and the incompetence is clearly due to the employee's misrepresentation at the time of hire. For example, in Bridgewater v.
Leon's Manufacturing Co- Ltd.^, the plaintiff sued Leon's for wrongful dismissal after he had been dismissed due to poor job performance as the company's new marketing and sales director. When Bridgewater was hired, the company's order books were full and industry projections were highly favorable in the farm implement business. Yet when he was fired eight months later, sales were only 35 percent of projections, the order books were empty, the company had excessive inventory on hand, and sales force morale was low. Following Bridgewater's termination, the company was forced to lay off a large portion of the work force at a time when competitors were doing well in the marketplace. From information in Bridgewater's resume and interview, Leon's management had great expectations that the candidate ^T. H Wagar and J. D, Gram, "Dismissal for Incompe{.cnciy. Factors Use
