G. Promises of Job Security

Courts in some states are ruling that employees have the right to rely on representations made before hiring. In a growing number of recent cases throughout the country, some discharged employees are suing and winning lawsuits against ex-employers for breach of oral agreements promising secure employment and even jobs for life. While courts have generally recognized that employers may be bound by written assurances and statements made in employee manuals, handbooks, and work rules, they are now increasingly willing to consider oral contracts extended by management and company officers having the apparent authority to make such promises.

In some states, informal off-the-cuff oral assurances can bind the company. For example, a Michigan jury in one case awarded $1.1 million to a worker based on a claim of an oral promise of lifetime employment. In that case, the jury found the existence of a valid, oral contract and ruled that the company unjustifiably breached that contract when the employee was terminated.

Tip:Interviewers, recruiters, and other intake personnel are often advised never to say anything at the hiring interview that can be construed as a promise of job security. Try to remember all statements that imply anything other than an at-will relationship. For example, if you hear the words "permanent employment," "job for life," or the requirement that "just cause only" must be shown before being terminated, or are given broad assurances regarding job longevity, continued employment, or promises regarding career opportunities, write these statements down, including the time and place the words were spoken (and in front of whom) for future reference if applicable.

Even when employee handbooks and written personnel guidelines make it clear that no employee's job is guaranteed, there are circumstances when an oral assurance of secure employment may bind the employer assuming:

1.The discharged employee can prove such a statement was made;

2.The statement was a crucial factor in the decision to accept the job or decline another job with a competitor; and

3.The employee reasonably relied on such a promise and suffered damages as a result.

These were the facts with a national sales manager for a New Jersey company who worked four years and then was fired. At the trial she claimed that four months before getting fired the president had persuaded her to turn down a job offer from a competitor by a promise of lifetime employment. Although the company argued that the words were merely friendly assurances and weren't enforceable, the court ruled that the president's remarks had persuaded the employee to stay and could constitute a contract. In this case it was proved that a better employment opportunity was turned down based on the employee's reliance on an oral promise of permanent employment.

Counsel Comments:Companies are protected to a certain extent in this area because many employees have difficulty proving such statements were made, or that although made, no approval came from the company's president or board of directors (the only ones with legal authority to bind the company to an important promise). However, when a supervisor or officer who allegedly made such a statement has died, no longer works for the company and can't be located, or left under unpleasant terms, companies may be unable to rebut the employee's statements if a lawsuit is commenced. Some courts have ruled that conversations conducted in an atmosphere of critical one-on-one negotiation regarding terms of future employment may give rise to a contract of lifetime employment. One court held that an employee could be terminated only "for cause" (i.e., a good reason like insubordination or stealing but not for inadequate work performance) where the employee had inquired about job security during the job interview and the employer had agreed that the employee would be employed "as long as she does the job."

However, recognize that promises of permanent or lifetime employment from low- or middle-level company officials may not legally bind the employer. In many cases even the president does not have the authority to give a lifetime contract without the written approval of the company's board of directors; in some states (e.g., California) employment contracts that exceed a specified number of years are unenforceable.

Tip:Try to get the company to offer you a secure job so that you can't be fired without adequate notice or an opportunity to correct deficient performance. This is discussed in Chapter Three, Getting Hired.