Broken Promises From An Employer

Posted by Sessions & Kimball |

Employee Rights Attorney in Mission Viejo, California

“A man’s word is his bond”- or so it was hoped to be for centuries. Unfortunately, many employees have found that employers do not always follow that creed. Are promises of the employer binding? What recourse does the employee have for broken promises?

Promises Before Employment

Promises by an employer before employment commences have increased importance because of the significant damages resulting from reliance on them. Often, an employee may move across the country or give up another lucrative job based upon such promises.

Certainly, an employee can take legal recourse because of broken promises of the employer. Of course, promises made in writing are much easier to prove than promises that are merely related by spoken word. Even spoken promises may be substantiated by written documents or witnesses. A wise employee will document in writing all meaningful promises made concerning employment.

In addition, most states will grant the employee a different kind of relief called “tort” through a fraud claim if such promises were done with intent at the time they were made. A breach of contract claim against an employer might simply entail a promises that the employer sincerely thought would be fulfilled but ultimately was not. In order to prove a fraud claim, an employee must show that the employer knew that the promises that were being made would not be fulfilled at the very time of making such promises. The advantage of a fraud claim is that not only an employee’s out-of-pocket wage loss is reimbursed, but also the employee might obtain punishment or “punitive” damages as well because of the wrongfulness of the employer’s actions. These punitive damages often put “teeth” into an employee’s claim. Also, some states, such as California, have statutes providing that a fraudulent misrepresentation made by an employer to induce change of residence of an employee could result in double damages to the employee, as well as a possible criminal charge against the employer. It is that serious.

Promises Broken During Employment

An employer should abide by its promises it makes to an employee during employment. The problem is defining what is a promise and what is not. Often an employer will place disclaimers in its employee handbook stating that such guidelines are not promises and that it reserves the right to change them at any time. In rebuttal, one can argue that oral assurances or promises or even written confirmation of such have been given to employees that have caused them to rely on it. In addition, the general practices of the employer in dealing with certain employment issues might be construed to be a promise.

Again, the problem of proof is the difficult part of such a claim against an employer. An employee should keep an employee handbook, if at all possible, to document promises that have been made by the employer. In addition, as stated above, the employee should document any significant promises made.

Even if an employee is fired or laid off for justifiable reasons, there still may be a case for promises breached during or prior to employment. Also, a fraud claim might be available against the employer if intent can be shown. Some jurisdictions such as California prohibit a fraud claim if it relates to the termination of employment but not to other aspects of employment.

Promises Broken by Ending Employment

Even though this is often the main issue considered by terminated employees, the other types of contractual claims as mentioned above should not be ignored. Essentially, the basic law throughout the country is that an employee is hired on an “at-will” basis whereby employment can end at the discretion of the employer or the employee with or without cause or a good reason. Montana is the only state in the country that has a statutory exception to that rule that requires good cause for termination of employment. There is a legal “presumption” that the employer has the right to terminate employees at their own whim or discretion, even without a good reason. This does not mean that it is the final decision on that issue. It is only a presumption that can be rebutted by the employee. The major exceptions to this rule are as follows:

  1. Express contract – In most states in the country, if an employee has an express contract for a set duration of time, the courts have required the employer to have good cause to justify termination of employment. Some sates in that situation will require an even higher standard of “willful breach of duty” or “habitual neglect.” It would be much more difficult to fire an employee in that type of situation.
  2. Implied Contract – Most states recognize an additional exception if it can be determined that the employee had an implied contract requiring just cause for termination. In evaluating such a contract, the courts consider the length of employment, handbook provisions, oral assurances of continued employment, personnel policies of the employer and practices in the industry. Because of this policy, most attorneys for employers now advise their clients to try to justify any terminations based upon good cause even if they feel that it is an at-will relationship.
  3. Public Policy – All of the states recognize public policy exceptions to the rule. This means that the entire at-will doctrine will be disregarded if the employee has a claim against the employer that is based in statutory or constitutional law such as prohibiting discrimination or preventing retaliation against whistle-blowers. The employer is prohibited by law from discriminating against employees in certain areas, even if the employee has just applied for employment, worked only one day or 20 years.

Even if a layoff occurs that appears to be justified on its face, if there was a double standard whereby an employee feels they should have “picked the other guy” because of discrimination, a claim may be pursued. Terminations or layoffs may be improperly based on a pretextual reason rather than a real reason arising from discrimination or retaliation.

Not only will an employee have a breach of contract claim according to this exception, most jurisdictions will allow an employee to pursue an independent tort claim for breach of such public policy and recover punitive damages as well. Some violations even involve criminal penalties against the employer.

Relation With Other Claims

As mentioned above, an employee may have other tort claims against the employer in addition to a claim for breach of contract. One of the advantages of a breach of contract claim is that the statute of limitations deadline period is usually longer for it than for a tort claim. In California, for example, the deadline for a breach of an oral contract is two years and for a written contract four years from the date of the breach. Tort claims, on the other hand, in California have a one-year deadline. Even if the deadlines for such other claims have expired, they may become a “piggyback claim” on the shoulders of a contractual claim if the employer promised to follow such other rules, such as equal employment opportunity. Also, contractual claims provide for a definite method to ascertain damages by evaluating wage loss. It is often very difficult to determine the more nebulous tort and punitive damages. A contractual claim is often the beginning or the backbone for establishing other claims.

“A man’s word should be his bond.” In fact, as mentioned, with the support of courts and legislators, this duty is often legally imposed on employers. Too bad that it takes laws sometimes to make it happen. For help with a claim against your employer, reach out to our Orange County employment attorneys today.