Fraudulent misrepresentation in Illinois employment cases.

Author:Gonzalez, Richard J.


Anyone who practices plaintiff's employment law has encountered potential clients who tell a story that is some variation of one of the following scenarios. 1) Based on oral representations of an employer, the employee quit her job and relocated her family to accept a new job only to find out that the position and salary are not what was promised or are not available after all.

2) The employee was promised that if he were to forego an age claim, accept a demotion, and remain with the company to complete an important project, he would be kept on until the age of 65 with no salary reduction, hut a few months later is fired.

3) The employee, a salesman paid on commission, was told to forget about making sales and to instead concentrate on other trouble areas outside of his job description, such as marketing and research, promising him the same compensation he would have earned had he concentrated on sales. In reliance the employee spent his time flying across the country engaging in non-sales related tasks. At the end of the year, the company said "Sorry, your sales were too low."

Whether it be a promise relating to salary, working conditions, length of employment, or benefits, employees often accept the word of their employer and hope the promises come to fruition. Unfortunately, once employers have gained the benefit of the bargain, they do not always follow through, leaving the employee groping for an effective legal remedy.

The bleak Illinois legal landscape for oral employment promises

So, what can an employee do to redress this sort of deception? The seemingly obvious answer is a breach of contract claim. Unfortunately, in Illinois this can be a very daunting task when the plaintiff is relying on an oral employment contract, because Illinois is among the nation's least accommodating states when it comes to enforceability of oral contract or promissory estoppel claims.

At-will rule. In Illinois, employment contracts are presumed to be at-will and terminable by either party. (1) The Illinois courts do not allow for a cause of action based on discharge from employment-at-will and "'have shown no disposition to abandon the at-will doctrine except in carefully defined areas'" such as violation of public policy. (2) To rebut this at-will presumption and to establish the existence of an oral employment contract, an employee must present evidence that establishes the existence of 1) a clear and definite promise and 2) adequate consideration. (3)

Thus, the first hurdle an employee will face is whether or not there was an employment contract. As Illinois law has developed, this may be the easier part of the employee's burden. Even where Illinois courts recognize, for example, an oral promise to hire as a valid oral contract claim, the employer invariably has the defense under the "at-will" rule that it cannot breach a contract by firing an employee who could have been fired at any time under the "at-will" doctrine.

Statute of frauds. What about an employee who was promised employment for a specified duration? In some states, he or she could be in good legal shape, but not in Illinois. Illinois courts are within a minority of jurisdictions holding strong to the statute of frauds which, in relevant part states,

No action shall be brought ... upon any agreement that is not to be performed within the space of one year from the making thereof, unless the promise or agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized. (4) Based on the statute of frauds, Illinois courts hold that employment contracts that cannot be completed within one year, which includes lifetime employment contracts, fall within the statute of frauds and therefore, must be in writing. (5)

For an employee, this means that any employment contract guaranteed for a period greater than one year must be in writing. The supposed purpose of this rule is "to protect not just the parties to a contract, but also--perhaps more importantly--to protect the fact finder from charlatans, perjurers and the problems of proof accompanying oral contracts." (6)

The statute of frauds does indeed provide protection to employers, but what about employees? While some courts may hold that "oral contracts for at-will employment are outside the statute of frauds," this principle may be of little use to an employee. Logically, an employment contract for an unspecified duration could theoretically be completed within one year and thus avoid statute of frauds concerns. (7) But Illinois courts also frequently hold that "contracts of indefinite duration are presumed to be at-will." (8)

This often leaves an employee in an unforgiving "Catch 22." If the oral employment contract was for a specified duration greater than a year, the contract exists, but is unenforceable due to the statute of frauds. If the oral employment contract is for an unspecified period, the contract falls outside the statute of frauds, but is then presumed to be an "at-will" relationship allowing for termination for any reason at any time.

Promissory estoppel. Claims for promissory estoppel bode not much better for Illinois employees. As Professor William D. Goren has noted, "things have become very strange in the state of Illinois." (9) Indeed, Illinois courts appear to be split on whether a plaintiff may assert promissory estoppel as a cause of action at all. Those courts that allow promissory estoppel as an affirmative claim have narrowly defined its applicability. "Promissory estoppel is not a doctrine designed to give a party ... a second bite at the apple in the event that it fails to prove a breach of contract." (10)

Under Illinois law, a claim for promissory estoppel will only succeed where all the other elements of a contract exist, but consideration is lacking.... Thus, the doctrine of promissory estoppel is applicable only under certain narrow circumstances to serve as substitute for consideration or an exception to its ordinary requirement. It necessarily follows that where there is no issue of consideration, there is no gap in the remedial system for promissory estoppel to fill. (11) Additionally,

where a plaintiff is unable to establish a written "promise or agreement" sufficient to satisfy the statute of frauds under the traditional requirements of contract law, he will also per se be unable to demonstrate the existence of an "unambiguous promise" for promissory estoppel purposes, for the promissory estoppel standard is more rigorous. (12) Further, plaintiff-employees face the additional practical...

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