Ask a Lawyer
Is a Verbal Job Offer Binding?
What to Do When an Employer Backs Out
I received a verbal offer for a job through a recruiter for a company that was in a hurry to hire someone. I was told to come in for a background check and medical tests, and if all went well I would start the day after. I gave notice to my current job, went through all the hoops and showed up ready to work. When I arrived, however, I was informed that the company had also offered the job to someone else through their in-house recruiting. Now I have no job.
It sounds as if you have a strong case for breach of contract, breach of the covenant of good faith and fair dealing, and promissory estoppel.
While it is most always better to have a contract in writing, verbal contracts are fully enforceable, too. There also exists in every contract a “covenant of good faith and fair dealing.” This covenant implies a promise that each party will refrain from doing anything to injure the rights of the other party to receive the benefits of the contract.
The extent of the duty imposed by the covenant depends on the contract and the parties’ justified expectations. Here, you justifiably expected that after quitting your old job your new employer would not renege on the offer. Accordingly, you likely have a cause of action for breach of contract and of the covenant of good fair and fair dealing.
Promissory estoppel is legalese for the principle that if a person changes his position in reliance on the promise of another — including an oral promise — he may hold the promissor responsible for the costs he incurs in reliance on the promise. These would include lost salary and benefits from your former job.
Your claim for breach of contract, if successful, would entitle you to damages measured by the salary and benefits you would have earned at the new company, in addition to any consequential damages you might have suffered, such as your COBRA payments. You may recover your costs of suit (such as filing fees and court reporter fees), but, unfortunately, not your attorney fees.
Of course you must “mitigate your damages,” (i.e., look diligently for a job). However the law does not require you to take a job of substantially inferior pay or status.
Amy Semmel is a partner with the firm Kelley • Semmel, where her practice focuses on employment 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.