Chapter 18 - § 18.3 • EMPLOYER'S DUTY TO EMPLOYEE


§ 18.3.1—Duty To Pay Compensation

A well-settled principle of agency law is that, unless circumstances indicate the contrary, it is inferred that a person promises to pay for services the person requests or permits another to perform for him or her. Restatement (Second) of Agency § 441. In Aerospace Realty Co. v. Tooth, Ltd., the court held that if an employment contract contains no agreement as to amount of compensation, the law will imply a promise to pay a reasonable amount. 539 P.2d 1314, 1316 (Colo. App. 1975). Circumstances that might indicate the contrary may arise from the relation of the parties or the triviality of the services. For a detailed discussion of a Colorado employer's specific duties to pay compensation under the Colorado Wage Act, see Chapter 20.

Practice Pointer
Where the agreement on compensation is unclear, employee's counsel should consider recovery based on a claim of implied contract or quantum meruit.

§ 18.3.2—Duty To Provide Work

The general rule is that an employer has no duty to provide an opportunity for its employees to work, provided the employer pays the employee the agreed-upon compensation. The Colorado Supreme Court, however, has recognized an exception to this general rule, and the Colorado Court of Appeals has applied this exception in such a manner as to possibly swallow the general rule.

In Van Steenhouse v. Jacor Broadcasting of Colorado, Inc., the Colorado Supreme Court decided whether the plaintiff stated a valid claim for breach of contract based on a failure to furnish work. 958 P.2d 464 (Colo. 1998). Ms. Van Steenhouse, a psychologist, was a radio personality on Jacor's radio station, KOA. Van Steenhouse and KOA entered into a three-year agreement under which Van Steenhouse would be a talk show host and would work "on air from 2:00 p.m. to 4:00 p.m. Monday through Friday (any change in such hours to be mutually agreed upon)." Id. at 466. During the term of the contract, KOA acquired the rights to broadcast the Rush Limbaugh Show, which conflicted with the time slot occupied by Van Steenhouse. Consequently, KOA discontinued Van Steenhouse's show, but continued to pay her for the duration of her contract.

Van Steenhouse sued KOA for breach of employment contract. The trial court and court of appeals both agreed that KOA breached the contract by preventing her from performing as a talk show host according to the terms of the agreement. The Colorado Supreme Court affirmed on this issue.

Relying on the Restatement (Second) of Agency § 433, the supreme court initially noted the general rule that employment agreements ordinarily do not impose a duty on an employer to furnish work for an employee. Such a duty, however, may be inferred depending on "the circumstances under which the agreement for employment is made or the nature of the employment." Id. at 467 (quoting Restatement (Second) of Agency § 433(1953)). The court of appeals' decision referred to the breach of this duty as a "breach through idle-ization." Van Steenhouse v. Jacor Broadcasting of Colo., Inc., 935 P.2d 49, 52 (Colo. App. 1996), aff'd in part, rev'd in part, 958 P.2d 464 (Colo. 1998). The supreme court reasoned that the obligation to provide work arises when the employee materially benefits from performing the duties described in the agreement:

[A] promise by the principal to furnish [the agent] with work is inferred from a promise to employ only if it is found that the anticipated benefit to the agent from doing the work is a material part of the advantage to be received by [the agent] from the employment. The anticipated benefit may be the acquisition of skill or reputation by the employee or the acquisition of subsidiary pecuniary advantages, as in the case of the employment of public performers whose reputation will be enhanced by their appearance or diminished by their failure to appear. . . .

Van Steenhouse, 958 P.2d at 467 (quoting Restatement (Second) of Agency § 433 cmt. c).

In holding that Van Steenhouse stated a valid claim, the court also relied on a decision of the California District Court of Appeals, Colvig v. RKO General, Inc., 42 Cal. Rptr. 473 (Cal. App. 1965). That case involved...

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