Nurse Laid Off Shortly After Hiring: Hospital Must Pay For Misrepresenting Its Financial Condition, Court Says

Legal Eagle Eye Newsletter for the Nursing Profession

May 1996  

  The court saw this case as a case of silent fraud by the employer. The personnel director told the nurse that money had been allocated for her position, but failed to mention the hospital’s precarious financial position, of which he was fully aware. The court ruled that the nurse had grounds for a lawsuit to recoup the losses she suffered in taking the position.

  The Court of Appeals of Michigan said, "Today’s employment market is both tenuous and difficult. Nearly all employment is ‘at-will.’ The economic stability of a potential employer is an important factor in accepting a job offer. Consequently, an employer who succeeds in asserting its economic health to attract qualified employees knowing the assertions are untrue may not later hide behind an ‘at-will’ employment contract. Neither may [the employer] be permitted to avoid liability after omitting to disclose, when asked, known economic instability which later leads to economically-based layoffs."

   A nurse was hired by a hospital as an employee health nurse. According to the court record, she sold her home in Saginaw and moved to Detroit to take the position. One month after she started she was laid off along with one hundred fifty other employees, in response to a severe financial crisis. She was rehired, however, several months later, at a higher salary.