Legal Memorandum: Fraudulent Inducement of Employment

Issue: If statement made by an employer concerning employment does not support a fraud or breach of contract claim, can an employee still argue that the statement should be enforced in equity on a theory of promissory or equitable estoppel?

Even when a statement made by the employer concerning employment does not support a fraud or breach of contract claim, the employee may be able to argue that the statement should be enforced in equity on a theory of promissory or equitable estoppel.  30 Causes of Action 2d 1, supra, Cause of Action for Fraudulent Inducement of Employment § 3, Practice Guide; see also Tracy A. Bateman, Annotation, Employer’s State-Law Liability for Withdrawing, or Substantially Altering, Job Offer for Indefinite Period Before Employee Actually Commences Employment, 1 A.L.R. 5^th 401 (2012).  Generally, such an argument must be supported by demonstrating that the employee reasonably relied on the employer’s statement to her detriment, that the employer reasonably should have foreseen the employee’s detrimental reliance, and that injustice can be avoided only by treating the statement as enforceable.  30 Causes of Action 2d 1, supra, Cause of Action for Fraudulent Inducement of Employment § 3, Practice Guide (citing Gorham v. Benson Optical, 539 N.W.2d 798 (Minn. Ct. App. 1995); but see Ferris v. Bodycote Lindberg Corp., Civ. No. 01-1689 (D.Minn. June 30, 2003) (holding that, because the plaintiff, if hired, would have been an at-will employee and the defendant employer could have fired him for any reason, a promise of employment did not have to be enforced to prevent injustice)).

The Minnesota Supreme Court has recognized that, even where no actual employment contract exists, the doctrine of promissory estoppel may, under appropriate circumstances, imply the existence of one.  See […]