Is My Offer Letter a Contract?

Heather submitted this question at Ask A Manager, and I thought it would be a good one to address here:

I was employed at a large successful company - while there, I got a call from a man who is a CEO of a smaller company offering me a job and saying he could beat whatever I was currently making. Long story short, I ended up taking the position in July at the smaller company and leaving my current position. Two weeks ago, the same man who hired me, also hired a sales manager who has convinced my boss that myself and 1 other rep are making too much money and he is trying to significantly lower our salaries and commission structure. My question is: if this man lured me away from my position at with an offer letter of more money and is trying to renege less than 6 months later, what are my rights? Is there a law that states how long an offer letter is good/enforceable?

Thanks
P.S. Not sure if it makes a difference but I live in Texas...

Heather, the bait-and-switch job offer is more common than you’d think. It happens all the time here in Florida, the center of con artists in the universe. Unfortunately, Texas, like most states in the nation, have at-will employment. That means that you can be fired, demoted, have your pay cut, or be disciplined for any reason or no reason at all.

Sure, the offer letter is probably a contract. It’s an offer and you accepted. There was consideration for it, namely, you started working. But what does that contract actually say? If it lays out your pay structure in writing and says it can only be changed in writing signed by both parties, then they can’t change it without your agreement.

If it says you can be fired at-will, then they can fire you for not agreeing. They can also fire you anytime for any reason.

If it says you can only be fired for cause, then what are your remedies? If the offer says you will be employed from x-date to y-date, then you should get paid out for the length of the employment. It might say that if you’re fired without cause you get a specific amount of severance. It might say that they can fire without cause with x-days of notice, in which case you get paid out for the length of the notice period.

One more possibility: fraud. If they had no intention of honoring the agreement when you were lured in, then you might be able to sue for fraud. It’s tough to prove, so things I’d look at are whether they’ve done the same thing to others. Is this a pattern? Is there some smoking gun or witness that would confirm they never intended to honor the offer? Or did the company have a sudden downturn after you started? If it’s a downturn, then there wasn’t fraud.

Donna’s tips:

a. If you are leaving a secure job for a new position, try to get some assurances in writing about job security. If they want you badly enough, they might agree to put in that they can only terminate for cause and some reasonable severance.

b. If you do get a contract, be careful what you sign. I’ve seen unscrupulous competitors lure top sales people over, have them sign non-compete agreements, then fire them a few months later. Surprise! You’re out of the industry unless you have the financial resources for a long legal fight.

c. Do your due diligence before you accept a job that sounds too good to be true. Google the new employer. Ask to speak to some coworkers before you accept. See if you can find some former employees (try LinkedIn, which lists former employers) to talk to about what their experiences were.

d. If you decline a unilateral pay cut and are fired or quit as a result, you might qualify for unemployment.

Have you ever gotten a job offer that wasn’t what it seemed? If so, did you take legal action or just leave as soon as you could? Do you think there should be some consequences to employers who make phony job offers? If so, what should they be?

I’d also love to hear from other lawyers and HR people, especially in Texas, to see if you have more advice for Heather.