California Labor Code Section 970 - Interpretation
Labor Code section 970 prohibits employers and their agents from inducing employees to relocate to accept employment by way of knowingly false representations.
In Lazar v. Superior Court (1996) 12 Cal.4th 631, an employee filed suit under section 970, contending he had accepted employment based on verbal representations of continued employment, the company's strong financial base, and pay raises. (Lazar, supra, 12 Cal.4th at pp. 635-636.)
The representations by the employer proved completely false: the company was financially in dire straights, a merger was in the works that would eliminate the employee's position, and company policy severely limited pay raises. (Id. at p. 636.) The employer also secretly intended to treat the employee as if he were an at-will employee, subject to termination without cause. (Ibid.)
The employee resigned his position in New York and accepted the employment offer.
After relocating his family and performing in an exemplary manner, the company fired the employee for cause. (Lazar, supra, 12 Cal.4th at pp. 636-637.)
The Supreme Court found the employee could plead a cause of action for fraud:
"Lazar's employee's reliance on Rykoff's employer's misrepresentations was truly detrimental, such that he may plead all the elements of fraud. Lazar's employer, Rykoff, did not have the power to compel Lazar to leave his former employment. Rykoff's misrepresentations were made before the employment relationship was formed, when Rykoff had no coercive power over Lazar and Lazar was free to decline the offered position. Rykoff used misrepresentations to induce Lazar to change employment, a result Rykoff presumably could not have achieved truthfully (because Lazar had required assurances the Rykoff position would be secure and would involve significant increases in pay). Moreover, Lazar's decision to join Rykoff left Lazar in worse circumstances than those in which he would have found himself had Rykoff not lied to him. (Allegedly, Lazar's secure living and working circumstances were disrupted, and Lazar became the employee of a financially troubled company, which intended to treat him as an at-will employee.)" (Id. at pp. 642-643.)