Billetter v. Posell

California Court of Appeal · Contracts

Contractsemployment contractwrongful dischargemitigation of damagesdefinite-term employmentwrongful dischargemitigationreemployment offer

Facts

Plaintiff and defendants entered into an oral agreement under which plaintiff would work for one year, from July 1, 1946 to June 30, 1947, as a floor lady and designer for $75 per week plus a $500 Christmas bonus. Plaintiff testified that defendants adopted those terms after reviewing a competing written offer she had received, and defendants paid her $75 per week through the end of 1946 and $300 toward the bonus. Around the Christmas holidays, defendants decided to replace plaintiff as designer and offered to keep her only as a floor lady at a reduced weekly wage; plaintiff refused the reduction and left. During her unemployment, she received payments from the State Unemployment Compensation Fund.

Issue

Whether the evidence supported the finding of a one-year employment contract and wrongful discharge, and whether defendants could reduce damages by crediting either unemployment compensation benefits or their offer to continue plaintiff's employment at a lower wage.

Rule

When an employee is hired for a definite period at an agreed wage and is wrongfully discharged before the term ends, the employee may refuse the former employer's offer of reemployment at lower wages if accepting it would amount to a modification of the original contract or a waiver of the right to recover under that contract. An employee is not required, in mitigation of damages, to perform the same work for less pay, and unemployment compensation benefits are not deductible from wrongful-discharge damages. Reemployment by the same employer need only be accepted when it is in the same general line of work and is offered in a manner that does not prejudice the employee's rights under the original contract.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nina Torres signed a 12-month employment agreement with Lakeview Design Studio in Chicago to work as a showroom manager for $1,200 per week. After four months, the studio discharged her without cause and immediately offered to keep her in the same position for $900 per week, saying nothing about preserving her contractual rights.

If Nina sues for the unpaid balance of the original term, what is the strongest argument against reducing her damages based on the employer's offer?

Explanation. The majority rule is that a wrongfully discharged employee hired for a definite term need not accept reemployment from the same employer at lower pay when doing so would amount to a modification of the original contract or a waiver of the right to recover under it. The employee is not required to perform the same work for less pay in mitigation of damages. (Derived from Billetter v. Posell (n.d.).)