Resume Fraud Could Cost Employees

For the first time, the Michigan Court of Appeals ruled that an employee who secured employment through resume fraud may be individually liable for damages to an employer under Michigan’s Authentic Credentials in Education Act (ACEA). The Act, in effect since 2005, protects employers from the costs of false academic credentials by providing a cause of action against “diploma mills” or individuals that use false academic credentials to obtain employment, promotions or increases in compensation. In 2016, the ACEA was first successfully used by a municipal employer to pursue a claim against an online university that issued fraudulent academic credentials. Municipal employees used the false credentials to obtain educational allowance payments and salary increases.

Recently the Court of Appeals ruled that the ACEA supported an employer claim against a former employee who used resume fraud, not false records, to obtain employment in 1991, well before the effective date of the ACEA. The employer claimed that it gave the employee promotions and pay raises after 2005, in continued reliance on the employee’s original 1991 resume fraud. The employer relied on the ACEA’s damages section, which states that a plaintiff “may recover costs, reasonable attorney fees, and the greater of either the person’s actual damages or $100,000.00.” The court rejected the employer’s claim that this provision made the former employee “strictly liable” for at least the $100,000 damages amount and remanded the case to the trial court for a determination of whether the employer was actually damaged by the former employee’s resume fraud. If, at trial, the employer proves it was damaged, but cannot prove the monetary value of damages with reasonable certainty, the employer may well argue entitlement to at least $100,000 as a form of statutory liquidated damages for a violation of ACEA. In this regard, the case warrants continued monitoring.

In sum, the ACEA will prove to be a valuable tool in the continuing battle to eradicate the harmful effects of resume fraud. However, employers will need to be able to prove that both hiring and later decisions (e.g. raises or promotions) were based on the initial false representation, if the ACEA is to be an effective, long-term deterrent to resume fraud.