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False Accusations And Defamation: The Risks When Employees Are Accused Of A Crime

By Leslie Zieren, The McCalmon Group, Inc.

A jury awarded millions to a Colorado man in his defamation lawsuit against his former employer. He also sued for malicious prosecution, abuse of process, and negligence.

According to the allegations in the lawsuit, the plaintiff had worked for the staffing agency employer as an on-site supervisor for four years. The plaintiff needed to leave early one day because of family issues. He subsequently decided to leave his job and informed his employer via email. Two days later, police arrested him on suspicion of theft.

According to police, the plaintiff's supervisor, who was a vice-president, contacted them, stating the man had set up a "ghost" employee on the organization's payroll system and had been collecting this false employee's wages over a period of four months. As police began investigating the accusation, it became clear that the supervisor/vice-president had invented the story, leading the district attorney's office to drop the charges.

In the lawsuit, the plaintiff alleges the arrest resulted in the withdrawal of three subsequent job offers, which led to financial difficulty and the loss of his house. Joe Moylan "Former Employment Solutions supervisor wrongfully accused of embezzlement awarded $2.7M by Weld County jury" www.greeleytribune.com (Apr. 23, 2019).

Defamation in general involves making a false statement to others that causes injuries to the subject of the statement. In this case, a supervisor/corporate officer falsely accused the former employee of being a thief, which resulted in him being arrested and losing job offers. Defamation lawsuits can lead to recovery of lost wages, but also to damages for emotional trauma.

The supervisor/vice-president fabricated the supposed incident and accusation as some sort of retaliation; however, even in situations in which an actual crime has occurred and an employee or former employee is suspected, an employer's first response to reports of employee wrongdoing should be to investigate the situation and not to make accusations, especially public accusations.

As a manager, of course you should never fabricate allegations of criminal or other activities against anyone in your workplace. In addition, when it appears a crime may have been committed, report it immediately to those in your organization who can arrange for an investigation. Do not inform the suspected employee at this point. Investigators may decide to leave the suspected employee in place to see if he or she takes further criminal actions so that they can "catch them in the act." Do not discuss the matter with others to avoid allegations of defamation if the allegations are ultimately found not to be true.

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