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Employee Relocation, Then No Job

In cases where someone is seeking recovery for relocation fees related to a job offer that was subsequently rescinded, the trend seems to be that while courts recognize the losses suffered, they cannot justify awarding damages because they are not convinced the potential employer had any duty in the first place to guarantee the job or guarantee relocation fees if the job offer did not go through.

The general rule is that a contract for permanent employment is only a contract for an indefinite period of time and terminable at will be either party unless it is based on some consideration other than services to be rendered. Fibreboard Products, Inc. v. Townsend (1953) 9 Cir., 202 F.2d 180, 182.

The “other services to be rendered” must be clearly communicated between the parties to create the exception to the rule.  There must actually be a bargain. As discussed in Bard v. Kent, the Restatement language regarding consideration states that “the fact that the promisee relies on the promise to his injury, or the promisor gains some advantage therefrom, does not establish consideration without the element of bargain or agreed exchange.’ Bard v. Kent (1942) 19 Cal.2d 449, 452.

In Ferreyra v. E. & J. Gallo Winery, the Court held that a contract for permanent employment was terminable at will, unless the plaintiff clearly told defendant that he would not consider leaving his job unless he was promised permanent employment with the company. That was not the case there so there was no showing of any consideration for the contract, other than the services that were to be rendered. Ferreyra v. E. & J. Gallo Winery (1965) 231 Cal.App.2d 426, 41. The appellant there claimed that the exchange of letters he had with his potential employer, wherein he explained he would be leaving his home of Argentina for California for the sole purpose of pursuing this job, created a contract of permanent employment and additional consideration (the expenses of leaving his job, moving his entire family to California), thereby making it illegal for the company to break his employment deal without cause. The Court disagreed, however, pointing out that the plaintiff failed to show any evidence that he communicated to defendant he would never have left his home or given up his job unless defendant promised him permanent employment. On those grounds, the Court found for the defendant company. Id. at 432.