Chapter 17 - § 17.4 • FRAUD

• Jurisdiction: Colorado

§ 17.4 • FRAUD

Fraud (or "deceit based on fraud" as it is known in Colorado) may arise in the form of either an overt false representation, or a concealment or nondisclosure. A false representation comprises any oral or written words, conduct, or combination thereof that creates an untrue or misleading impression in the mind of another. CJI-Civ. 19:3 (CLE ed. 2022). Conversely, a concealment occurs when a person conceals a fact known to him or her and creates a false impression of the actual fact in the mind of another person by (1) covering up the truth, or (2) preventing the other person from discovering the actual fact. CJI-Civ. 19:6 (CLE ed. 2022). A claim based on fraud, misrepresentation, or deceit must be brought within three years from the time the cause of action accrues. C.R.S. § 13-80-101(1)(c).

In the employment relationship, fraud may be perpetrated by either the employer or the employee. Fraud perpetrated by the employer may result in compensatory and punitive damages to the injured employee. Fraud perpetrated by the employee may result in dismissal of a claim brought by the employee against the employer.

§ 17.4.1—Employer Misrepresentations

Employers who commit fraud to induce prospective or current employees to act may be liable for damages in two ways: statutory and common law.

First, Colorado makes it unlawful for any person to induce "workmen" to change from one place of employment to another by means of false or deceptive representations. C.R.S. § 8-2-104; see also Pittman v. Larson Distrib. Co., 724 P.2d 1379, 1386 (Colo. App. 1986); Roberts v. Conoco, 717 F. Supp. 724, 726 (D. Colo. 1989). The employee must be employed at the time of inducement to be considered a workman under the statute. See Schur v. Storage Tech. Corp., 878 P.2d 51, 53 (Colo. App. 1994). A plaintiff must be induced to move into or out of Colorado, as an employee who resides in Colorado both before and after employment with the defendant will not have a cause of action. Vaske v. DuCharme, McMillen & Assocs., Inc., 757 F. Supp. 1158, 1164 (D. Colo. 1990).⁵ The statute gives an injured employee a private right of action against the offending employer for all damages sustained as a result of the fraud, as well as for reasonable attorney fees. C.R.S. § 8-2-107. Anyone found in violation of this statute is guilty of a misdemeanor and may be punished by fine, imprisonment, or both. C.R.S. § 8-2-105.

Employees also may recover under the common law theory of fraud. The...