Barran Liebman Alert: The Oregon Supreme Court Isn't Really Attacking At Will Employment

On March 7, 2013, the Oregon Supreme Court reversed the Court of Appeals' decision in Cocchiara v. Lithia Motors, Inc. [an enhanced version of this opinion is available to lexis.com subscribers], and held that when a job applicant reasonably relies on an offer of at-will employment and that offer is revoked prior to the start of work, the job applicant may have a claim against the would-be employer for damages caused by the reliance. Although it sounds like an ominous change, the case had some unusual facts that plainly led to the result.

The employee worked as a salesperson at one of defendant's car dealerships, but the job was stressful and after a major heart attack, the employee's doctor recommended a less stressful job. He found a different job, and here's where the problem started: his manager told him not to take it because he was too valuable to lose, and promised him a different job in the company that would meet his health needs.

In reliance on the promise, the employee turned down the other job opportunity. But then he didn't get the promised internal job. By that time, the other job had been filled. In the end, he got a new job with a new employer, but it paid less.

That's where the claim came from. In resolving the legal issue, the Supreme Court reaffirmed the general rule - that in at-will employment, typically, neither the employer nor the employee can expect the employment relationship to last for any particular period of time. But that really wasn't the issue raised here. What was really at stake was whether employees should be protected when they reasonably rely on employer promises, and whether there should be a rule that "encourages employers and employees to take their promises seriously."

In the end, employers who don't fulfill their promises and cause their employees to lose something can expect a claim for promissory estoppel. The claim isn't a slam dunk, though. The employee still has to prove that his or her reliance was reasonable and that there were provable damages.

To avoid this admittedly unusual situation: follow the court's advice and take your promises seriously. If you want to talk your employee out of taking a different job, be prepared to stand behind the promises you make.

The case can be found here.

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Electronic Alerts are written by Barran Liebman attorneys for their clients and friends. Alerts are not intended as legal advice, but as employment law, labor law, and employee benefits announcements.