Before you make a solid job offer and induce an applicant to make major changes in order to accept the job, consider this: If you end up not being able to follow through on the offer, you may end up sued for breach of promise—in legal terms, called promissory estoppel.
That’s why it’s crucial to run and make all other preliminary hiring decisions before the candidate relies on the offer and places himself in a worse situation than if he had rejected the offer or never received it.
Note: It does not help if your offer includes clear language stating that employment is at-will or that there are no promises of continued employment.
Recent case: Mitchell Schley is an experienced corporate lawyer who supervised the Newark office of the National Labor Relations Board and served as managing director of Bear Stearns’ Legal and Compliance Department. He responded to a job posting for a senior attorney position at Microsoft in Washington state.
After two phone interviews, he was personally interviewed by Microsoft’s associate general counsel. After several more interviews, the company offered Schley the position. The two parties spent a few weeks negotiating the terms. The offer letter specified that it was not a contract, and that employment was at-will. Schley signed.
Meanwhile, on Microsoft’s suggestion, Schley traveled to Washington to house hunt and put down a substantial down payment on a new home. He put his New Jersey home on the market and gave notice to his employer.
But then Microsoft withdrew the offer after learning of a possible arrest in Schley’s past. Although it turned out to be a mistake, Microsoft still pulled the offer without any explanation. Schley sued, alleging promissory estoppel.
The court said his case could go forward despite the no-contract language in the offer letter. The court said there had been a clear promise of a job, with the expectation that Schley would rely on it. He did when he gave up his job, sold his house, bought a new one and prepared to relocate. Since that caused him harm, the court said he could sue. (Schley v. Microsoft, No. 08-3589, DC NJ, 2008)
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