Reasons for Disputes Archives

“The Three Kinds of Fraud – Recognizing and Avoiding Them at Work”

Published on September 30th, 2015 by Alan L. Sklover

“No one will find me to have knowingly committed fraud.”

– Bernard Ebbers
(Inmate #56022-054, Oakdale
Federal Correctional Institution)

ACTUAL “CASE HISTORY: Every two years, Hal had to certify to his employer, a large law firm, that he had completed the Continuing Legal Education (“CLE”) courses necessary to maintain his law license. He did so although he had been so busy he had not completed two of them. He figured he could make it up during his upcoming vacation. When he was asked to attend a meeting with the Managing Partner, he thought it was to discuss his anticipated promotion to partner status. Instead, he was told he had committed a very serious fraud by his CLE certification misstatement, and was therefore fired, with a recommendation that he report himself to the Attorney Disciplinary Board for possible license suspension or disbarment. Hal’s misstatement sure was a costly mistake!

Gilbert was a Marketing Director for a company that sold franchise opportunities for a new “healthy” fast-food chain. The marketing brochures highlighted how fast-growing the franchise was. In fact, it noted that 23 new stores had opened up in just the last 12 months! Months later, he was quite taken aback when he was named in a lawsuit by three franchise purchasers who had lost money on their franchise investment. Their lawsuit alleged that Gilbert had participated in a fraud. Why? Because while it was true that 23 new stores had opened up in the previous 12 months, it was also true – and not mentioned in the marketing materials – that 41 had gone bankrupt in that same period. A fairly costly omission, no?

Ariana was perplexed. Her offer letter stated that she would be awarded a 3% ownership interest in her employer “upon approval of the Board of Directors at their next meeting.” She had resigned her previous job for this very opportunity to become an owner of a company. After hearing nothing in six months, in exasperation, Ariana asked for a meeting with the company President, and a clear answer at the meeting. Sure enough, she got her clear answer: the Board had voted not to award her any stock ownership interest, without reason. It sure didn’t seem like they ever really intended to give her the ownership interest in the first place. She felt fooled and tricked; even defrauded. A costly lesson for her.

LESSON TO LEARN: What Hal did, what Gilbert failed to do, and what happened to Ariana were, in each instance, kinds of fraud that can happen at work. It could happen (1) to you, (2) by you, (3) by your employer, (4) against your employer, and (5) in any number of other ways. If you are not careful in your statements and actions, and mindful of those of others around you, you could be harmed by fraud at work. I hear about such situations often.

The word “fraud” sounds so negative, so scary, and so accusatory. It is all of those things, but at the same time “fraud” is a simple concept, and one you should try to “avoid like the plague” in light of its implications and possible consequences to you. Being accused of “fraud” – or similar words, like deception, misrepresentation, misleading, and dishonest – can ruin your reputation and end your career. Likewise, being the victim of fraud can be both costly and hurtful.

Four different aspects of today’s workplace each mandate that you understand, and avoid, any situation that could be characterized as “fraud”:

First, “zero tolerance.” We live in a very “zero tolerance world” when it comes to workplace allegations of improper behavior. Even “whispered” allegations against you can be devastating. If your colleagues, your employer or your customers come to believe, rightly or wrongly, that you have not been honest with them, it could well result in immediate dismissal. That can happen to any employee, even one with a signed, long-term contract.

Second, the internet. We live in a very information-rich world, in which accusations against you – even if you are not “found guilty” – can become known worldwide, follow you into your future, and be near-impossible to erase.

Third, increased competition. So many companies and organizations are under so much financial pressure these days that we are seeing many of them encouraging their employees to “bend the rules,” “stretch the truth,” and “cut corners” in any number of ways. An employee can easily get caught up in a fraudulent scheme hatched by others, and even blamed for it. And companies have to keep a keen eye out for others – including customers and vendors – from defrauding them.

Fourth, seemingly lowered integrity standards. The world, and that includes the world of work, seems at times to have recently suffered from “lowered standards” of honesty. Everyone seems a bit less confident that showing good faith will result in others showing good faith in return. When it comes to collecting what you have been promised and are due, it seems to be a bit of a less dependable world. And there seems to be more “fraudsters out there” than ever before.

In recent times, Volkswagen has been accused of fraud by deceiving environmental regulators as to the fuel efficiency of their diesel automobiles. General Motors has been accused of fraud by failing to tell auto safety regulators of over 100 deaths resulting from a defective ignition switch. Investors in mortgage-backed securities have collected billions in damages for being defrauded by mortgage processors. Surely, certain individuals were at fault, and certain others were not. If there is a problem where you work, will you be accused?

But, “forewarned is forearmed.” There is a lot you can do to protect yourself, your interests, your career, and your reputation, from fraud against you, your company, and your clients, and accusations that you engaged in fraud, as well.

No matter who is to blame, and who may be victimized, it is wise to be vigilant to the possible occurrence of such situations, and be cognizant of their telltale signs. Prevention is the name of the game in this context.

WHAT YOU CAN DO: Basically, there are three kinds of fraud, and all are sometimes seen at work. Learn to recognize them, and consider what you will do if you find fraud in your midst:
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“If my boss approves a payment to me in error, am I entitled to receive it?”

Published on September 29th, 2011 by Alan L Sklover

Question: Dear Alan: I have an issue with my employer over a lack of payment.

Here’s the situation: I was a salaried employee with my company for the first four months of the year, after which I took a different position as a part-time manager. I noticed in our login system that I had 40 hours of personal time I could use, which I requested to use a couple of weeks ago as a week off.

It was approved by my District Manager, and I took the week off. But when my paycheck came, I did not get paid for the time off. When I spoke with the company about it I was told that I cannot be paid for it because the company has a policy of not providing personal time to part-time employees, even though (a) I was “coded wrong” in their system, (b) it showed I had 40 hours to use, and (c) the District Manager approved it.  

I would not have taken the time off if I knew I was not going to get paid. Is there anything I can do to get the week of pay?

Columbus, Ohio

Answer: Dear Chris: As often happens, (a) the law does not provide any real remedy for you, but (b) navigation and negotiation may do so:  

1. There are legal arguments both in your favor and not in your favor. On the one hand, the law generally provides that, where both parties to an agreement made an error of fact, the resulting agreement is not enforceable. Applied to your situation, the law would say that both you and your manager made a central error – you were not entitled to personal time – and any agreement based on that mutual error would be considered null and void. On the other hand, when you reasonably relied on the repeated errors of your company, you ended up being short one week of pay, which you would not have done if the company had not made repeated errors. That is called “action in reliance,” and constitutes a kind of contract in the law. Who is right? Who is wrong? I think it would be something of a toss-up if you were ever to go to Court.  

2. But talk of “legal arguments” never does very much good for an otherwise good working relation between employee and employer. It will be no surprise to you that talk about anything “legal” at work makes employers uncomfortable. When the words “legal” or “lawyer” are used, employers start to view the situation as negative or adversarial, and that can start your employer looking at you in a negative light, too. So, we try to avoid any use of the words “legal” or “lawyer” unless it is both necessary and appropriate, which it is not for you at this time.

3. However, you are always free – and I encourage you – to make a respectful request for payment of the week’s salary you lost due to (a) no fault of your own, but rather (b) several errors of the company. It is a fact of life that differences, disagreements and disputes will arise in every relation. I always encourage reasoned and respectful efforts to resolve differences between employees and employers. In fact, resolution of differences between an employee and an employer can often be a relation-building experience. I think that this is because when one person of good will sees good will in another person, it is very much appreciated.

I suggest a rather simple, short letter to your Manager and the Head of Human Resources laying out – without accusations or vitriol – what happened and that, as a result of what happened, you are short one week of pay. The fact that you would not have taken the vacation had it not been for the repeated assurances (though in error) that you would be paid for the time is the one fact in your situation that really “shouts out” to me. I would emphasize that in your letter.

Don’t forget to recognize and acknowledge their viewpoint, too – that company policy is against paying you – but you can also point out that company policies are always somewhat flexible if and when a good reason for flexibility exists. That kind of “navigation and negotiation” is the best course of action for you to take, of that I am confident. While there is no guarantee it will work, you are guaranteed to lose out completely if you don’t give it a try.

In my experience, Chris, employers are sometimes so surprised to receive a respectful letter like the one I recommend you send, especially if their perspective is given respect by the author, that they often give the employee all, or almost all, of what they reasonably ask for.

I hope you’ll give this a try, and that it will prove helpful. I hope, too, that you keep returning to our blogsite, and encourage others to do so, too, for any “working wisdom” you might need.   

Al Sklover

Monies owed to you by present employer? Your best bet is to make a respectful written request. We offer a Model Letter to show you “What to Say, and How to Say It.”™ To obtain your copy, just [click here.] Delivered by Email – Instantly! 

© 2011 Alan L. Sklover, All Rights Reserved.

“If a firm was representing me in my case against my employer and was also doing work for my employer, is that a ‘conflict of interest’?”

Published on July 22nd, 2010 by Alan L Sklover

Question: I took my employer to our local Labor Court. In my case I was represented by a firm that – I found out later – was also working for my employer. My case was dismissed in favor of my employer.

Was the firm that represented me in a “conflict of interest” in my case?

      Seattle, Washington

Answer: John, what you describe is the very definition of a conflict of interest.

A conflict of interest exists when a person’s interests would benefit from taking an action, and also benefit from not taking that very same action. For example, if you work for a company that sells cleaning supplies, and your son sells brushes to your company, will you try your hardest to get the best price for the company, or to get the best price for your son? I’d imagine that you would feel, in your heart, “conflicted” about how much the company should pay for the brushes.  

There is an old saying that illustrates conflicts of interest: “A man who has a watch always knows what time it is; a man who wears two watches is never sure.”

By the way, I’ve written an entire newsletter article on how to spot Conflicts of Interest, and what to do if you are affected by one. If you’d like to read it [click here.]

I strongly suggest you write one letter by email, FedEx or UPS, to three parties (1) the firm that represented you, (2) your former employer, and (3) the Labor Board, and advise them that you believe that you did not get a truly fair hearing because your representatives seem to have been conflicted by their doing work on “both sides.”

That is not an allegation of dishonesty, but rather an acknowledgment that it is not possible to do your best when you are in such a conflict of interest. I suggest you ask for a new Hearing to have your case re-examined.

By the way, if your representatives were licensed attorneys, you may have a claim against them for legal malpractice, or for a refund of anything you paid them, because attorneys are ethically responsible to avoid such conflicts.

Hope this helps.

          Best, Al Sklover

©  2010 Alan L. Sklover, All Rights Reserved.

“If my employer paid me late, and I incurred overdraft charges as a result, what can I do?”

Published on February 7th, 2010 by Alan L Sklover

Question: Hi! What can I do if in my employment contract it said that I would be paid each 15th day of the month, and each 30th day of the month, but due to my employer’s lateness in depositing my payments, I incurred an overdraft charge?

Yorkshire, England

Answer: You can and should do two things:

First, you should try to find out why the payment(s) were late. Was a clerk on vacation, did the company have a problem with cash-flow, or perhaps did the employer believe your contract said something different? Finding out the “root cause” of a problem is your first task, because it is the key to (a) preventing its recurrence, and (b) your success in your second step.

Second, respectfully, but without hesitation, let your employer know that payment(s) were late, that it was due to their fault or error, you incurred an overdraft charge as a result, and that you would expect the employer to reimburse you for the financial charge incurred.

Companies are not different than people: they should make amends for their errors and the harm their errors have caused. So long as you act in a respectful fashion, there should be no repercussions to you, and your chances of reimbursement are pretty good.

Of course, you could also bring the matter to your country’s version of our “small claims courts” but we usually do not recommend such adversarial actions in light of the potential harm to your employment relations.

Thanks for writing in. Hope you’re enjoying our blog.

Best, Al Sklover

P.S.: Become part of a growing movement; help others while you help yourself! Become a SkloverWorkingWisdom™ Sales Affiliate – encourage others to take advantage of our Model Letters, Memos, Checklists and Agreements. Earn a substantial commission. Just [click here.] 

© 2010 Alan L. Sklover, All Rights Reserved.

Email at Work – Avoid These “Dozen Digital Disasters”

Published on January 14th, 2010 by Alan L Sklover

“It’s not the most intellectual job in the world,
but I do need to know the letters.”

– Vanna White (Co-Host, “Wheel of Fortune”)

ACTUAL “CASE HISTORY”: It’s happened to everyone, including you, me and all of our friends: an email sent to the wrong person, or containing a message we wish we did not transmit. On this topic, chances are you could probably share a few “digital disaster” stories of your own. The subject is that important, though, that it’s worth devoting a few minutes of time, consideration and reflection, especially considering the potential risk it represents.

Enrique was the Dean of a prestigious architecture school. He was also a well-known architectural critic, who wrote articles for many magazines and was often interviewed in the mainstream media. As Dean, he oversaw the school’s faculty, and had significant input on whether non-tenured faculty members would receive reappointments to their positions.

When the question of Helena’s faculty reappointment arose, Enrique knew there would be strong feelings both “pro” and “con.” Due to Helena’s renown in landscape architecture, she was particularly well known and highly regarded, and was considered a “darling” of the rapidly growing followers of “green,” or eco-friendly, architecture movement. However, due to Helena’s “strong” personality, which included a penchant for participation in controversial political demonstrations, and an alleged “fondness” for illegal substances, many of the tenured faculty saw Helena more a liability to the school than an asset.

In response to an email sent to Enrique by a trusted faculty friend, Enrique replied, “I have no such concerns; as soon as Helena finds the right medication for her psychosis, all will be fine.” Enrique was careful not to send the email to anyone else, but only to his friend. Unfortunately, at just about that time, the school’s email system seemed to freeze up, and Enrique’s email was never transmitted.

The next day a software engineer working on the school’s main computer server found the problem in the email system, and fixed it. That is when the email about “Helena’s psychosis” was transmitted, but for some unknown reason it was distributed to every person in Enrique’s email address book, including all of his worldwide media contacts. This gave Helena’s supporters on the school’s Board of Trustees ammunition in their quest to change the school’s “social awareness.” Long story short: Enrique was required to resign, and then sued by Helena for defamation. With considerable effort, we were able to resolve both matters for Enrique on reasonable terms, but the damage to his finances, relations and reputation were substantial.

LESSON TO LEARN: Email is a powerful communication medium. Like anything powerful, its power both helps and hurts. If not used wisely, with discretion and care, it can cause great damage to your interests, career and reputation. When emailing, you must be careful, very careful.

Email is probably underestimated as a potential tool of self-destruction due to its being so commonplace in our lives. Some people send and receive scores – even hundreds – of emails a day. It’s easy to let your “email guard” down, especially when you have limited time to respond to an avalanche of emails in your “in box.” But keeping your “email guard” continually up is an absolute must.

  • Before you write an email, ask yourself, “Who might be offended or upset by this?”
  • Before you reply to an email, ask yourself, “Must I send this now, while I am uncertain of a best response, or even emotional?”
  • Before you press “send,” ask yourself, “How could this possibly hurt me?”

Will “common sense” and good judgment suffice to protect you? No, for two important reasons. First, today’s “ultra-sensitivity” requires “hyper-attentiveness” to possible risks of offending people. Many believe this “ultra-sensitivity” defies common sense. Second, the nature of email, itself, creates unusual risks that defy common experience: nowhere else do you have such things as “reply-all” buttons, the ability to respond so hastily, and the possibility that your employer can be identified by your workplace email address. With emails, more than “common sense” and old-fashioned good judgment is necessary.

The lesson is this: “There are no erasers on your keyboard.” Once an email is sent, it is sent forever. Treat emails as you would sharp knives, bearing in mind that a single momentary “slip” can cause untold pain.

WHAT YOU CAN DO: Read over these “Dozen Ways to Avoid Digital Disasters,” and then read them over again. Additional effort to protect yourself regarding emails at work is necessary, because common sense and good judgment won’t suffice. Here’s the twelve things you need to bear in mind:

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Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

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