Broken promises lead to record verdict for ex-employee
July 27, 2009 by Sam NarisiPosted in: Employment law, Hiring
Promising employees too much when they’re hired can lead to big legal headaches. In one recent case, it led to an arbitration decision you’ll have to see to believe.
When Paul Thomas Chester was hired to be the Chief Marketing Officer of iFreedom Communications, he was promised a wealth of compensation and perks, including commissions, stock options and paid travel expenses.
The problem: He claims he was never paid what he was promised.
After complaining to the company and getting nowhere, he took legal action. The two parties ended up in arbitration, in accordance with an agreement Chester had signed.
The arbitrator ruled that iFreedom hired Chester by means of “false representation and fraud,” the Associated Press reports.
The final price tag for the employer: $4.1 billion (no, that’s not a typo), including unpaid wages, interest and punitive damages. Apparently, the company did well while Chester was there, and the commissions owed to him were hefty.
Legal experts say it’s likely the largest amount ever awarded to a single plaintiff in an employment case. However, they expect the award to be reduced when the company appeals in court.
This type of case is common, albeit on a much smaller scale — a manager finds a desirable candidate and bends the truth to get the person to accept an offer. But this case should give supervisors 4.1 billion reasons to only make promises the company can keep.
Tags: false representation, Hiring
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July 28th, 2009 at 6:38 pm
Just curious – did this thief quit, get fired, or was he just “let go”? I have to figure that all of these perks were in writing – I can’t believe the judgement if the promises were verbal. Then again, all things seem to “spin” against the evil employers.
July 30th, 2009 at 8:03 am
Hi Mary, I think you miss understood the article, the employee, who was promissed much (apparently in writting) and recieved much less than was promised, was the one who is no longer employed. Surely you are not calling the employee a thief! The company is apparently the one who contracted the promised wealth of compensation and perks, including commissions, stock options and paid travel expenses. The company was not holding up its end of the bargain, the employee apparently was making a great deal of money for the company. Who’s the thief? I think you might want to re-read this article and think about it before making such bold statements which make you lookeither bitter or ignorant.
July 31st, 2009 at 8:05 am
Some of the other facts of this case include them firing him when he complained and the owner firing his attorney and representing himself…both pretty stupid moves. jThe owner refused to provide information regarding profits so the judge made the award based on the sales numbers which had been published.
July 31st, 2009 at 8:19 am
Edward, I agree and unless there were extenuating circumstances as to why the company could not pay, the employee was entitled to what he was promised.
October 27th, 2009 at 2:32 pm
I would love to have this employee working for me and making those kinds of contributions resulting in $4B in commission, etc and expemses. Why did they get rid of him? The company official must’ve been a real fool to do so.