Question of the Day

Which of the following exceptions to the concept of employment at will applies when an employer entices an employee to take action by promising a reward but then does not follow through once the action has been taken?

a. Statutory exception

b. Duty of good faith and fair dealing

c. Promissory estoppel

d. Contract exceptions

Correct answer: Promissory estoppel

Employment at will was defined in 1884 by Justice Ingersoll as being employment in which “either party may terminate the service, for any cause, good or bad, or without cause, and the other cannot complain in law.” Several situations exist that allow for exemption to this common law doctrine, including the following:

  • Promissory estoppel is similar to fraudulent misrepresentation. In the workplace setting, this occurs when an employer has made a promise that it should reasonably have known would cause the employee to believe a more permanent employment relationship existed, and the employee has relied on this promise, causing harm. To prove the existence of promissory estoppel, the employee must show the following: (1) a clear promise was made by his employer, (2) he/she relied on that promise, (3) to his/her substantial detriment (by giving up some benefit, such as an existing job), and (4) damages measured by the extent of the obligation assumed by the employer and not performed.
  • Statutory exception: Employment at will may not be used as a pretext for terminating employees for discriminatory reasons as set forth in equal-opportunity legislation or other legislation designed to protect employee rights.
  • Duty of good faith and fair dealing: Every contract contains an implied duty of good faith and fair dealing. This duty requires that neither party will do anything that will destroy or injure the right of the other party to receive the benefits of the contract.
  • Contract exceptions occur when at-will intentions are outlined in an express or implied contract. Despite most states in the U.S. having at-will legislation, a contract stating otherwise would alter this at-will status.