Employee can recover “reliance” damages against employer who reneges on job offer

A recent state appeals court decision serves as a reminder to employers not to make promises to hire if they can't deliver on the promise. In Toscano v. Greene Music, which was decided on December 2, 2004, the court held that an employee who quits his employment in reliance on a job offer by another employer can sue the hiring employer on a "promissory estoppel" theory and recover "reliance" damages if that employer reneges on the offer. "Reliance" damages are measured by the value of what the plaintiff gave up in reliance on the defendant's conduct (here, a promise of a job offer) verses what the plaintiff received from the defendant (in this case, nothing).

Fortunately, while the court in Toscano upheld this theory of recovery, it rejected the amount of damages that were awarded in the case. The damages amount, which had exceeded a half a million dollars, was based on assumptions from the plaintiff's damages expert that, had the plaintiff not left his prior employer for the job that never materialized with defendant, he would have continued working for his prior employer until retirement. The appeals court concluded that these assumptions by the expert were "speculative" and therefore could not support the damage award.

Persons wishing further information or who have questions or comments about either this case or any of the cases that have appeared on this website can contact any of the attorneys at Epstein, Turner & Song.