Many employers believe that because they are looking to hire an at-will employee, this means that they not only can hire and fire that employee for any reason or no reason, but they also can retract job offers already extended without any legal risks and consequences to them. This is often not true, and the case below illustrates how a common scenario of a job offer being rescinded can lead to liability –
In Toscano v Green Music (2004), The California Fourth District Court of Appeal held that a candidate who quits an at-will job in order to accept another at-will position may recover lost future wages from the second employer who presented the new job offer if (a) the second employer withdraws its job offer and (b) the employee who accepted the new job offer after resigning from his previous job can prove lost earnings by “substantial evidence” . The court reasoned that promissory estoppel (reasonable reliance on a promise of a job offer) entitles a plaintiff who quit a job to recover “the lost future wages” the employee can prove he would have earned from his former at-will employer, had the plaintiff not relied on the promised employment and remained at his previous job.
Even though in this type of case future wage loss damages are inherently speculative, such factors as the employee’s performance at his last job, the length of time he already worked for that previous employer before resigning, that company’s companys’ continued operations and financial health can form a basis for proving anywhere between one year and five years or even more of future wage loss damages.
Many employers these days extend “conditional” job offers to their candidates, pending background investigation or pending some other event. If the employment offer is indeed conditional, the company should make it very clear to that employee that they are not officially hired until that condition is satisfied. Ideally, as an employer you should not be telling yout candidate what their start date is until they are actually (and not conditionally) hired, in order to avoid any confusion.