©2026 Seyfarth Shaw LLP www.seyfarth.com 2026 Cal-Peculiarities | 117 5.9 Misrepresentation Claims 5.9.1 Employer liability for fraudulent inducement Labor Code section 970 authorizes double damages for an employee who has been induced to change from one place to another by false promises regarding employment. Many states refuse to use the doctrine of promissory estoppel to aid an employee who leaves a job to accept an at-will job that never materializes. In California it’s different. Even if the plaintiff has left an at-will employment, the California employer inducing the plaintiff to leave another’s employ can be liable under theories of promissory estoppel309 or promissory fraud310 for the income the plaintiff lost by leaving the prior employer in reliance on the new employer’s pre-hire promises. A California court held that a plaintiff who was hired by an at-will employer with false promises of compensation, and who was fired six months later for complaining about the broken promises, could recover the compensation that he would have earned with his former employer, which would have re-hired him but for its strict no-rehire policy.311 In 2022, the Court of Appeal held that an at-will employee could not rely on any promises about how long he would be employed because the employee’s at-will employment status rendered such reliance unreasonable as a matter of law. The employee could base his lawsuit on alleged misrepresentations during the interview about the nature of the employment being offered, however, including whether the employer knowingly misrepresented that the employee would be hired to fill the role of lead project manager for the company. As a result, the Court of Appeal reversed the lower court’s grant of summary judgment.312 In 2024, the Court of Appeal held that although one managing agent believed the representation to the prospective employee about the value of restricted stock units was accurate, because another managing agent knew the valuation was inaccurate at the time the job offer was made, that knowledge of the inaccuracy was imputed to the employer.313 5.9.2 Employer liability for too-generous references: negligent referral A California employer that gives a reference praising a former employee, while failing to report facts showing the employee’s dangerous tendencies, may be liable for intentional or negligent misrepresentation. A school district that praised a former employee for his ability to work with children, while failing to report his misconduct with children, was subject to a misrepresentation suit by a child whom the employee molested in his new employment. In this situation, the school district presented “misleading half-truths” and was obligated to complete the picture by disclosing material facts regarding charges and complaints regarding the former employee’s sexual improprieties.314 On the other hand, employees of a school district that employed a substitute teacher who later molested students in another district was not liable for negligence and owed no duty to those students. The Court of Appeal found there was no legislative intent to create liability to all future children who might be harmed by a suspected abuser.315 Rather, the duty is premised on the reporting party's observation of and access to the very child as to whom abuse could be reasonably suspected, and within the professional capacity of the reporting party.316 5.9.3 Employer liability for blackballing Labor Code sections 1050-1054 make an employer liable for treble damages and misdemeanor criminal penalties for misrepresentations to prevent a former employee from obtaining new employment. However, an employee may not be able to recover both statutory treble damages and punitive damages, as this would constitute an impermissible double recovery.317
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