The Oregon Supreme Court recently decided, for the first time, that if an employer reneges on a job offer for an "at-will" position, it may be liable for wages that might have been earned if the individual had been hired. Cocchiara v. Lithia Motors, Inc., No. S060100 (Mar. 7, 2013). This was a sharp departure from previous Oregon appellate court cases, which had held that such a claim could not be made because, in an at-will situation, the individual could have been fired at any time. Under the new ruling, depending on the facts, the individual may be able to have a jury decide how long it believes the individual would have worked for the employer and, consequently, how much the individual would have earned during that time.
The facts of the case, viewed in the light most favorable to Cocchiara, are simple, but the impacts of the decision may be far-reaching.
Cocchiara worked as a salesperson at a Lithia Dodge dealership from 1997 to October 2005. Following a major heart attack in 2004, Cocchiara's doctors recommended that he find a less stressful job. He received an offer to be a sales representative for the Medford Mail Tribune, a position that satisfied his health requirements. He then went to Lithia's general sales manager to tell him that he planned to take the Medford Mail Tribune job. The general sales manager responded that Cocchiara should not accept the Medford Mail Tribune position because he was "too valuable" to Lithia, and that a new "corporate" job was available with Lithia that would meet his health needs.
After placing a call to Lithia's corporate offices, the general sales manager advised Cocchiara that he had been given the corporate position and that he would be contacted the next day to come in to finalize the paperwork. Cocchiara then asked the general sales manager to confirm that the offer was definite, given Cocchiara's outstanding job offer from the Medford Mail Tribune. The general sales manager confirmed that Cocchiara had been given the job and that the meeting the next day was a "mere formality." After his discussion with the general sales manager, Cocchiara told the Medford Mail Tribune that he had decided not to accept its offer because he had received another job with Lithia.
When Cocchiara met with one of Lithia's representatives the next day, the Lithia representative told him that he had not been hired for the corporate job. Instead, the representative was meeting with Cocchiara to interview him as one possible candidate for the corporate job. Ultimately, Lithia did not hire Cocchiara for that job. When Cocchiara then tried to accept the Medford Mail Tribune's prior job offer, that job had been filled. Cocchiara later accepted a different, lower paying job with the Medford Mail Tribune.
Based on those facts, Cocchiara sued Lithia on several legal theories, including promissory estoppel and fraudulent misrepresentation. As part of his claim, Cocchiara sought economic damages for the income that he would have earned in the corporate job with Lithia. Lithia filed a motion for partial summary judgment, arguing that because the corporate job was an at-will position that Lithia could have fired Cocchiara from at any time, he had no reasonable basis to rely on the offer.
The trial court granted Lithia's motion for summary judgment, ruling that Cocchiara could not reasonably rely on Lithia's job offer or recover any damages because the job offered to him was terminable at will, and, therefore, as the trial court observed,
"[T]hey didn't tell him you got a job for the rest of your life here. * * * He didn't rely on having a job for more tha[n] a day because * * * nobody said to him, and you're going to have this job for X amount of days, months, or years. * * * [H]e couldn't rely on something that was never said to him."
The Oregon Court of Appeals agreed with the trial court, relying in large part on a case that it had decided in 2000.
In a unanimous opinion, the Oregon Supreme Court reversed the lower courts and sent the matter back for a jury trial. The supreme court held that a jury could find that Cocchiara had reasonably relied on the promise of a job offer, even though the job was terminable at will, and that he was entitled to attempt to prove damages for the loss of the job. The court stated:
"[P]laintiff may seek to prove what he would have earned in the corporate job and how long he likely would have remained in that job had he been hired as promised and allowed to start work."
Employer Takeaway: This decision raises the stakes substantially for employers that withdraw an offer of employment. Before this decision, a promise of at-will employment was generally considered too illusory to support a claim for lost wages, because by definition, at-will employment can be terminated at any time for any (or no) reason. Now an employer considering withdrawing an offer must factor in the risk of a jury's finding that the "at-will" job would have lasted for months, for years, or even until retirement, and that damages or lost wages may be awarded accordingly.
The lesson is that employers must ensure that job offers are not made casually or without authority, and that any decision to withdraw an outstanding job offer must carefully weigh the risks involved.