Better Late Than Never: The Importance of After-Acquired Evidence in Employment Cases

What should you do when you’ve fired an employee, the employee sues you, and you later find evidence that the employee engaged in egregious misconduct?  Tell your attorney.  This evidence, called “after-acquired evidence,” can be a useful defense in employment cases.

As an example, suppose that a law enforcement agency terminated an employee for poor performance.  The employee then sued, claiming that her supervisor subjected her to sexual harassment and that she was wrongfully terminated in retaliation for reporting this alleged harassment. While investigating the sexual harassment allegation, the employer discovered that employee had been engaged in an improper relationship with an inmate, violating the employer’s rules regarding “overfamiliarity” with inmates.  Some may think this information is “too late” and irrelevant because it was not the grounds for the original termination.  However, this evidence was still important in showing that the agency would have fired the employee for misconduct, and showing that her damages, if any, should be limited to the date of discovery of the illicit affair.  The evidence also undermines the employee’s credibility because she was clearly disregarding the agency’s rules.

The doctrine of after-acquired evidence refers to an employer’s discovery, after an allegedly wrongful termination of employment, of information that would have justified a lawful termination or refusal to hire. Salas v. Sierra Chemical Co. (2014) 59 Cal.4th 407, 428 [173 Cal.Rptr.3d 689, 327 P.3d 797].

“In general, the after-acquired evidence doctrine shields an employer from liability or limits available relief where, after a termination, the employer learns for the first time about employee wrongdoing that would have led to the discharge in any event. Employee wrongdoing in after-acquired-evidence cases generally falls into one of two categories: (1) misrepresentations on a resume or job application; or (2) post-hire, on-the-job misconduct.” Camp v. Jeffer, Mangels, Butler & Marmaro (1995) 35 Cal.App.4th 620, 632 [41 Cal.Rptr.2d 329].

Based on the after-acquired evidence rule, even if an employee can prove that his or her employer acted improperly, the employer can limit the employee’s damages by pointing to after-acquired evidence of misconduct that would have led to termination.

As another example, suppose an employer terminates an employee for sleeping on the job.  The employee later sues for disability discrimination (not sleep apnea).  After the termination, the employer finds out that the employee it fired lied on his resume about his prior work experience and falsified timesheets during his employment.  If the employer can prove that these lies were serious enough to justify termination, this employee’s claim for lost wages may be limited to the time period between when the employer fired him and when it discovered the alleged fraudulent activity.  The rationale is that the employer would have fired the employee anyway at that point.  However, if no after-acquired evidence defense is raised, then the employee may be able to receive back pay from the date the employee is fired until the employee gets a new job, which could be months or potentially even years.

Also, if the employer proves its after-acquired evidence, the courts have held that the employer generally will not be required to reinstate/reemploy the employee or provide front pay, as it otherwise might be required to do.

Finally, in addition to limiting potential monetary damages, after-acquired evidence can help undermine the employee’s underlying claim.  In cases where there is after-acquired evidence of lying on one’s resume and falsifying time sheets, such evidence calls into question the employee’s credibility.  Of course, the employee’s attorneys will try to file a motion in limine to exclude this evidence from being introduced at trial, arguing that it is unduly prejudicial; however, evidence tied to the after-acquired defense is likely to be allowed at trial unless the attorney stipulates to cut off the damages from the date of discovery.

The after-acquired evidence doctrine reminds both employers and their attorneys that it is important to carefully examine the employee’s personnel file, talk to the employee’s co-workers and supervisors, and see if there were any other big problems with the employee during their employment. All of this evidence can be important, regardless of when it was discovered.

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