Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

تمرين 7

Promissory Estoppel and Employment Contracts
Today, approximately 85 percent of American workers have the legal status of "employees at will." Under this common law employment doctrine, which applies in all states except Montana, an employer may fire an employee for any reason or no reason. The at-will doctrine, however, does not apply to any employee who has an employment contract or who falls under the protection of a state or federal statute-which is, of course, a large number of employees. Even when an employee is subject to the employment-at-will doctrine, the courts sometimes make exceptions to the doctrine based on tort theory or contract principles or on the ground that a termination violates an established public policy (see Chapter 33).
These exceptions to the at-will doctrine, however, apply only when a current employee's employment is terminated. Should they also apply when a company fails to hire a job candidate after promising to do so For example, suppose that a job candidate, relying on a company 's offer of employment, quits his or her existing job, moves to another city, and rents or buys housing in the new location. Then the company decides not to hire the candidate after all. Given the candidate's detrimental reliance on the company's job offer, should the company be prevented from revoking its offer under the doctrine of promissory estoppel This question has come before a number of courts. As yet, however, the courts have not reached a consensus on the issue. Some jurisdictions allow the doctrine of promissory estoppel to be applied, but others do not.
Promissory Estoppel Should Not Be Applied
Many jurisdictions believe that reliance on a prospective employer's promise of at-will employment is unreasonable as a matter of law. Courts in these jurisdictions reason that a job applicant should know that, even if she or he is hired, the employer could terminate the employment at any time for any reason without liability. According to these courts, it would be contrary to reason to allow someone who has not yet begun work to recover damages under a theory of promissory estoppel, given that the same person's job could be terminated without liability one day after beginning work.
Consider a case example. Arlie Thompson had worked for nine years at a hospital as a technician assistant when she was laid off. A year later, the same hospital offered her a clerical position, which she accepted. She was measured for a new uniform, given a security badge, and provided with the password for the computer system. Thompson, who was then working at another job, quit the other position in reliance on the hospital's job offer. Shortly thereafter, the hospital asked her to take a test. When she failed the test, the hospital refused to hire her. Thompson filed a suit claiming that the doctrine of promissory estoppel should prevent the hospital from revoking its offer. The court, however, held that the hospital's promise of employment was not sufficiently "clear and definite" for that doctrine to be applied. a
[a. Thompson v. Bridgeport Hospital, 2001 WL 823130 (Conn.Super. 2001). See also Lower v. Electronic Data Systems Corp., 494 F.Supp.2d 770 (S.D. Ohio 2007); and Rice v. NN, Inc., Ball Roller Division, 210 S.W.3d 536 (Tenn.Ct.App. 2006).]
Promissory Estoppel Should Be Applied
A number of other jurisdictions, however, have held that a person can recover damages incurred as a result of resigning from a former job in reliance on an offer of at-will employment. These jurisdictions have determined that when a prospective employer knows or should know that a promise of employment will induce the future employee to leave his or her current job, the employer should be responsible for the prospective employee's damages. After all, without the offer from the prospective employer, the prospective employee would have continued to work in his or her prior position.
This approach is reflected in a case from 2007 involving Thomas Frey. In 1999, Frey was working for a firm at which he had substantial benefits and would have been entitled to stock options. Then Andrew Taitz of Workhorse Custom Chassis, LLC, offered Frey a position, promising him a large bonus if the company's earnings exceeded $39.1 million by the end of 2002. In reliance on that promise, Frey left his job and took the position at Workhorse.
By the end of 2002, projections indicated that Workhorse's earnings would exceed the required level. Frey therefore believed that he was entitled to the bonus when he left the company in January 2003. In the spring of 2003, Frey asked for his bonus, but Taitz responded that because Frey no longer worked for the company, he was not entitled to the bonus. Frey filed a lawsuit against Workhorse, claiming, among other things, that he was entitled to damages under the doctrine of promissory estoppel because he had left a lucrative and secure position to take the job at Workhorse.
Although Workhorse claimed at the trial that its 2002 earnings were only around $37.6 million, the audited financial statements it presented had been completed ten months late and were subject to a 5 percent margin of error. Workhorse also admitted that many employees would have received substantial bonuses if the earnings had exceeded $39.1 million. A jury found Frey's argument convincing and awarded him $648,220. Workhorse moved for a judgment as a matter of law and for a new trial, but the court ruled that Frey had presented enough evidence to support the jury's verdict. b
[b. Frey v. Workhorse Custom Chassis, LLC, ___F.Supp.2d ___ (S.D.Ind. 2007). For a case allowing a job candidate to recover damages from a prospective employer, see Goff-Hamel v. Obstetricians Gynecologists, P.C., 256 Neb. 19, 588 N.W.2d 798 (1999).]
WHERE DO YOU STAND
Some jurisdictions maintain that it is irrational to apply the doctrine of promissory estoppel to a promise of at-will employment, given that the employee could be fired after working for only one day on the job. Other jurisdictions conclude that the doctrine should apply because the employer should reasonably expect a job candidate in this situation to act in reliance on the promise. Does one of these two arguments have greater merit than the other What is your position on this issue