Legal Memorandum: Fraudulent Inducement of Employment in MN

Issue: May a claim for fraudulent inducement to enter into employment be brought as a common law claim in Minnesota?

Fraudulent inducement to enter into employment may be brought as either (or both) a statutory or a common law claim.  See, e.g., Progressive Tech., Inc. v. Shupe, No. A04-1110 (Minn. Ct. App. Apr. 12, 2005) (considering both a fraudulent inducement to contract and a violation of § 181.64, but finding that both claims failed there on the same basis: all of the alleged misrepresentations were representations as to future events, and even the plaintiff admitted that he did not view the representations as promises).  A common law cause of action against an employer for fraudulent inducement of employment requires proof that (1) the employer made a misrepresentation; (2) the misrepresentation was made with fraudulent intent or scienter; (3) the misrepresentation was material to the plaintiff’s decision to accept the employment; (4) the plaintiff reasonably or justifiably relied on the misrepresentation; and (5) the plaintiff sustained damages as a result of such reliance.  See generally 30 Causes of Action 2d 1, Cause of Action for Fraudulent Inducement of Employment (2012); P.G. Guthrie, Annotation, Employer’s Misrepresentation as to Prospect, or Duration, of Employment as Actionable Fraud, 24 A.L.R.3d 1412 (2012). 

An action for fraudulent inducement of employment may be brought on any one or more of four related theories:  (1) actual fraud, (2) fraudulent concealment or failure to disclose, (3) constructive fraud, or (4) negligent misrepresentation.  30 Causes of Action 2d 1, supra, Cause of Action for Fraudulent Inducement of Employment § 4.  Although the elements of these theories are similar, […]