A company in New York State makes a written offer of employment to an individual. Before the individual begins working at the company, the company’s profits plunge or its budget is cut significantly.
If the company withdraws the written offer of employment before the individual starts work, does the individual have a valid cause of action against the company for breach of employment contract or for fraud? To put it another way, are written offers of employment enforceable in New York before the prospective employee (that is, the offeree) begins work?
If the offered employment is at-will, then the short answer to these questions is “no.” New York law allows companies, without incurring liability, to revoke written offers of at-will employment before the prospective employees start work. This is the case even if the prospective employee has relied on the written job offer to his detriment, such as by quitting his prior employment, by turning down other job offers, or by moving from another state to New York State.
In general, employment in New York State is at-will. An employer in New York may terminate a worker’s employment for any reason or no reason, except for a reason prohibited by statute or policy. The public policy exclusion from at-will employment in New York is a limited one.
New York’s Appellate Division, First Department, has held that an individual, whose prospective employer revoked a written offer of at-will employment before the individual’s starting date, had no viable claim against the prospective employer for breach of employment contract. Arias v. Women in Need, Inc., 274 A.D.2d 353, 354, 712 N.Y.S.2d 103, 103-104 (1st Dep’t 2000). The First Department reasoned that the prospective employer’s reneging on its offer of employment did not constitute a failure by the employer to perform under an employment agreement with the individual, because the nature of at-will employment is that it “has no specified contractual term” and includes “[no] assurances that [the worker] w[ill] not be fired without cause.” Arias, 712 N.Y.S.2d at 104.
Further, the First and Second Departments of New York’s Appellate Division, and the U.S. District Court for the Southern District of New York, all have held or stated in dicta that, even where (i) a company, at the time to makes an offer of at-will employment to a person, knows, but does not disclose, that it intends to revoke that job offer before the person begins working at the company and (ii) the company, in fact, reneges on the job offer before the person starts work, the person has no valid claim against the company for fraud. See Morris v. Ales Group USA, Inc., No. 04-CV-8239, 2007 WL 1893729, at *6 (S.D.N.Y. June 29, 2007); Epifani v. Johnson, 65 A.D.2d 224, 230, 882 N.Y.S.2d 234, 240 (2d Dep’t 2009); Marino v. Oakwood, 5 A.D.3d 740, 741, 774 N.Y.S.2d 562, 563 (2d Dep’t 2004); Arias, 712 N.Y.S.2d at 104.
In so holding, New York’s First and Second Departments, and the Southern District of New York, reason that “Where a plaintiff is offered only at-will employment, he or she will generally be unable to establish reasonable reliance on a prospective employer’s representations, an element necessary to the recovery of damages under theories of fraudulent misrepresentation and negligent misrepresentation.” Epifani, 882 N.Y.S.2d at 240.
So, too, because an individual who is offered at-will employment in New York, and whose job offer is revoked before he begins work, “[can]not establish that he reasonably relied on [the prospective employer’s] representations,” such an individual cannot recover from the employer under the doctrine of promissory estoppel, even if he relied on the job offer to his deteriment. See Arias, 712 N.Y.S.2d at 104 (emphasis added).
Even though a company in New York may, without incurring liability, revoke written offers of employment before the individuals start work, it may be unwise, for business reasons, for the company to do so. For example, a company which reneges on written offers of employment before the offerees begin work, or which defers the offerees’ starting dates, may acquire, among desirable job seekers, a reputation for being untrustworthy.
Such a negative business reputation, in turn, may hamper the company in vying with its competitiors to attract the best job candidates. For example, in 2009, top law firms may have “suffer[ed]” a “black eye . . . on law school campuses by pulling [job] offers [to law students]” or by “deferring [incoming first-year associates’] start dates.”
If your company needs assistance or guidance on a labor or employment law issue and your company is located in the New York City area, call Attorney David S. Rich at (212) 209-3972.