Breach of Implied Contract and Promissory Estoppel/Detrimental Reliance: Employee Terminated Shortly After Relocating to Accept Job May Have Claims Without Written Contract

The general rule in Pennsylvania is that employment is at-will and unless there is a written contract specifying a length of employment or a law which prohibits termination for a legally protected reason (such as discrimination based on age, race, sex. religion. national or disability), an employee can be terminated for any reason. There are some circumstances where courts find that absent a written contact or a discriminatory intent, the presumption of at-will employment can be overcome. In Jones v. Flaster/Greenberg P.C., 2013 U.S. Dist. LEXIS 181007( E. D. Pa. December 30, 2013), the court recognized two exceptions where an associate employed at a Philadelphia law firm who was terminated 8 months after being hired filed claims for breach of implied contract and promissory estoppel/detrimental reliance against her former employer, Flaster/Greenberg. The Court denied a Motion to Dismiss the breach of implied contract and promissory estoppel /
detrimental reliance claims and found that the associate employee can proceed with her claims in court.

In Jones, the Plaintiff was self-employed as an attorney in Chicago, Illinois. She was offered a job at Flaster Greenberg and advised, if she accepted the offer, she would be mentored by Lynda Calderone, Esq., chair of Defendant’s intellectual property department. The employee accepted the offer based on this promise, closed her law practice in Chicago and moved to Philadelphia, where she began employment. The Plaintiff employee alleged that she did not receive the mentoring she expected and she was berated and worked fewer hours than the law firm required because the law firm’s partner would not give her work. Plaintiff spoke to the partner and other shareholders, and the law firm’s Human Resources Director about the partner’s treatment, but the situation did not improve. Ultimately, the Plaintiff employee was fired allegedly based on her performance, less than one month after her complaint; as a result she had no job in Pennsylvania, where she is not licensed to practice.
While the court acknowledged that the general rule in Pennsylvania is employment is at-will, the presumption can be overcome by showing that there is an express contract between the parties, with a provision stating that an employee can only be terminated for cause and there may be instances where a contract can be “‘implied-in-fact’,” if additional consideration passes from the employee to the employer from which the court can infer the parties intended to overcome the at-will presumption.. Additional consideration sufficient to overcome the at-will presumption exists where the employee affords the employer a substantial benefit other than the services which the employee is hired to perform, or when the employee undergoes a substantial hardship other than the services which the employee is hired to perform.
In Jones, the court found that there could be an implied-in-fact contract of employment because there was no indication of at will employment in a written document executed by the parties, the Plaintiff employee was not seeking employment but she was contacted by a legal recruiter on behalf of the law firm, she lived and worked in Illinois, she had no interest in looking for a new job or moving away from Illinois but to accept the offer of employment, the employee closed her law practice, moved 765 miles from Illinois to Philadelphia to begin her employment in Philadelphia where she had no friends or family and was not admitted to the Pennsylvania bar. In ruling the Plaintiff could go forward with her claims, the court noted that Pennsylvania courts have found additional consideration sufficient to overcome the at-will presumption where an employee relocates to another region and where the employee had to give up other job opportunities or resigned from another job and sold a home in order to take the job. Pennsylvania courts will only recognize the creation of an implied contract for a reasonable period of time which is commensurate with the hardship the employee has endured or the benefit bestowed. In Jones, the court concluded that the question of whether the hardship Plaintiff allegedly experienced was sufficient to overcome the at-will presumption was not so clear that reasonable minds would not differ on its outcome and a jury could conclude that there was an implied contract for a reasonable period of employment.

The court also found that the Plaintiff employee could have a claim under a promissory estoppel/detrimental reliance because in order to induce Plaintiff to accept the job offer, the law firm promised Plaintiff that she would be mentored, trained, and directed by a specific partner, and senior attorneys and shareholders. Promissory estoppel and detrimental reliance claims are treated interchangeably by Pennsylvania Courts. The elements of a claim for promissory estoppel and detrimental reliance are: (1) a promise made by the defendant to the plaintiff, which the defendant expected would induce action on the part of the plaintiff; (2) which does induce the expected action by the plaintiff; and (3) injustice can only be avoided by enforcing the promise.

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Filed under Breach of Contract, Employment Law, Implied Contract, Promissory Estoppel

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