My Employer Promised Me The Moon, But Gave Me A Rock

By: Rex A. Christensen, Esq.

One of the more difficult cases that a wrongful termination attorney may encounter is one where there was no discrimination, no retaliation, and no employment contract. In fact, at first glance, it may seem that there would be no possible way that such an employee would have any basis to claim they were wrongfully terminated.  In most cases, that will be true. However if the fired employee was an executive, high level manager, or a talented professional, there is a good possibility that she was enticed to leave her former employment with promises of compensation, benefits and other perks. If such an employee is fired shortly after taking the position, and there is no indication of illegal discrimination or retaliation on the part of the employer, what can be done?


An Employer Cannot Make Promises If It Doesn’t Intend to Keep Them

The answer may lie in a principle learned by most lawyers in their first semester of law school – promissory estoppel. Arizona courts have used both scholarly legal terminology and everyday language to explain this principle. For example, the Court of Appeals explained:

 

Arizona has adopted the Restatement of Contracts § 90, which states: A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.[1]


One of the most straightforward explanations of promissory estoppel comes from the Arizona Supreme Court which stated, "Estoppel is to be applied when it would be unconscionable to permit a person to maintain a position inconsistent with one in which he has acquiesced."[2]


The Law Requires People to Honor Their Promises

To put it in simpler terms, this simply means that if someone makes a promise, and the person he made the promise to believes him and acts on it, then the first person isn’t allowed to back out on that promise. For example, imagine that a car dealer tells a buyer, “If you can come up with the cash, I’ll sell this car to you for $20,000.00, but if you have to finance it, it will cost $30,000.00.” The person then sells her home in order to raise the $20,000.00 cash. The principle of promissory estoppel means that the car dealer is not allowed to back out of the deal at that point, because the buyer has already relied on that promise in deciding to sell her home.


Heavily Recruited Employees Should Not Be Fired Until The Promises Made To Them to Convince Them To Take The Job Have Been Fulfilled.

In the employment law context, it is almost certain that the only way an employer would be able to lure an in-demand, high-level employee (such as a programmer, financial analyst, or program manager) away from her prior position is by making promises about such things as salary level, vacation days, stock options, or how long the job will last. Sometimes these promises are explicit, but other times the promises are implied. For example, if a tech startup hires a software engineer, and promises as part of the compensation package that he will receive stock options which will vest after one year, then it is implied that he will be employed for at least one year. Otherwise, the promise of stock options is meaningless. If he was induced to leave a lucrative prior position, or to move to another state to accept the position, or to take any other substantive act in reliance on those promises, then to paraphrase the wording used by the Supreme Court, it would be unconscionable to allow the employer to simply change its mind, fire the employee after a few days or weeks or months, and not allow him to receive the promised benefits which induced him to take the job in the first place.


Employers Must Keep Their Promises Because It Would Be Unfair Not To

In the end, promissory estoppel is a principle of fairness. It prevents the employer from simply deciding to say whatever it wants and make whatever promises it feels are necessary to convince the employee to take the new job, and then leave them high and dry when it suits them.  If the employee has acted in reliance on those promises, then the employer must honor them, and being in an at-will employment state does not relieve the employer of this duty.


 Rex A. Christensen practices employment discrimination law in Gilbert, Arizona.

He can be reached at (480) 378-2400.

This article does not constitute, and should not be considered, legal advice, and you should consult with an attorney regarding your own specific legal matters. The existence of this article or your reading of it does not create an attorney-client relationship. Neither the Christensen Law Firm nor any of its attorneys may represent you without first establishing that doing so will not create a conflict of interest.

Rex A. Christensen is licensed to practice law in Arizona only.



[1] Tiffany, Inc. v. W.M.K. Transit Mix, Inc., 16 Ariz.App. 415, 420, 493 P.2d 1220 (App.1972)

[2] Ivancovich v. Meier, 122 Ariz. 346, 595 P.2d 24 (Ariz.1979).

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By: Rex A. Christensen, Esq.
Rex A. Christensen, Esq.
CHRISTENSEN LAW FIRM
2168 East Williams Field Road, Suite 200-A
Gilbert, Arizona 85295
(480) 378-2400
rex@rexachristensen.com