Working World

I offered an applicant a job, sending him a letter that asked for him to start in 4 weeks. Unfortunately, business circumstances have recently changed and I can no longer hire this person. What responsibility do I have to him at this point?

This is a very touchy situation. Your legal obligations to this prospective employee depends in part on the specific terms of your offer and on what steps he took in reliance on your offer.

If you offered the prospective employee a job for a specific period of time, such as one year, then you could be liable for breach of contract for failing to provide the job. The employee’s damages would be his salary, plus ‘consequential damages’ such as moving costs, less amounts that he might earn at another job. He has a duty to minimize his damages by finding another comparable job as soon as practical.

If the employee was not hired for a specific time period and was to be employed ‘at will,’ then you might still be liable to the employee for ‘promissory estoppel.’ This is legalese for the principle that if a person changes his position in reliance on the promise of another, he may hold the promissor responsible for the costs he incurs in reliance on the promise. Thus, if the employee were located out of town, sold his home, quit his last job and moved for your job, you could be held liable for the costs associated with the move and the sale of the home, as well as the salary and benefits he gave up in reliance on your offer.

You should note as well that California Labor Code Section 970 imposes double damages for inducing a person to move for a job on false pretenses as to the kind or existence of work, or the length of time the work will last, or the compensation. This statute should not apply in this case, but can complicate matters if the employee believes that you have not acted in good faith.

As a practical matter, you might wish to inquire into whether and to what extent the employee has incurred costs in reliance on the job offer and offer him a reasonable amount of compensation in exchange for a release of your company.

Amy Semmel is an attorney with the firm of Donfeld, Kelley & Rollman. Her practice emphasizes employment, trade secret and business tort law. The information discussed here is a general explanation of the law, and is not intended to serve as legal advice. Readers requiring legal advice regarding a specific situation should consult an employment attorney.