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Misrepresentation Made During the Course of Hiring: Long Term Benefits

Whitten and Lublin | Dec 12, 2017

Employers must make sure that personnel involved in the recruitment process accurately represent all conditions of employment. This not only includes salary, but any perks offered to employees such as benefits and long term disability (LTD) benefits. If a misrepresentation that is made played a factor in the employee accepting the job, then the employer may be liable for negligent misrepresentation and subsequent damages.

Feldstein v. 364 Northern Development Corporation (2016, BC Supreme Court) demonstrates a case where the employer was liable for damages of misrepresentation of LTD benefits. Cary Feldstein (Feldstein) was a 37 year old software engineer that was diagnosed with cystic fibrosis (chronic and degenerative disease). For Feldstein, LTD benefits were a must and he was not willing to accept an employment offer without coverage that covered his required monthly expenses.

Feldstein received an offer of employment from 364 Northern Development (364) as a software engineer. Feldstein inquired about the LTD benefits offered thought the company and based off the information provided, Feldstein concluded that the LTD benefits were sufficient in the event he needed to claim LTD. Specifically, Feldstein enquired about the LTD maximum benefit criteria and was told that “ ‘Proof of Good Health’ .. was tied to the 3 month probationary period”. Feldstein assumed this to mean that he was required to serve 3 continuous months of initial employment without illness.

Due to his condition, Feldstein eventually needed a lung transplant resulting in him claiming his LTD benefits. Having found he was only receiving a fraction of his anticipated maximum benefits eligibility, he was told by the insurer that he was required to complete a health questionnaire when his employment commenced. Feldstein was never told this and reasonably did not ask further questions regarding his eligibility. The court found that a failure by the hiring manager to divulge this information amounted to misleading information which Feldstein relied upon in deciding to accept the offer of employment. As a result, the court awarded Feldstein the amount that would have been paid to him through the LTD benefits maximum, in addition to $10 000 in aggravated damages.

Employers must ensure those responsible for representing positions offered by the company are accurately represented. This means that any misrepresented condition of employment that a prospective employee relies upon in accepting an offer may result in future litigation and costly claims in damages. Conversely, employees should seek legal advice if found in a situation as described above in order to be fairly compensated.

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