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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
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
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
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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by Barran Liebman attorneys
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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.