Employees often have a difficult time of establishing claims for fraud under Maryland. These types of cases often arise when an employee is promised compensation under a specific formula and then paid according to another. The Federal Rules of Civil Procedure require a claim for fraud be pled with particularity. This means the allegations about the fraud must be very detailed and specific. The employee must also allege facts showing that the employer had the intent to defraud and that the employee reasonably relied on the employer’s representations. In Reed v. HP Enterprises, Inc., the Maryland federal court ruled that an account executive had successfully alleged a claim for fraud. The case arose after the employee claimed he was owed approximately $630,000, but was paid only $400,000. The employee claimed that the employer had promised to pay him under one commission formula, and then retroactively changed the formula. The Maryland federal court ruled that the employee successfully stated a claim for fraud, ruling:
Specifically, HP is alleged to have told Jacobs how his commissions were going to be computed, to have permitted Jacobs to make lucrative sales on HP’s behalf while Jacobs believed he was going to be compensated at the rate in the Sales Letters, and to have retroactively changed the commission rate after the sales were made. These allegations plus the permissibly general allegations regarding HP’s intent, knowledge, and state of mind aresufficient for Jacobs to proceed on Count III.
This is a good case for an employee to rely on, to show that claims of fraud can be sufficiently pled.
