Recently, the California First District Court of Appeals in White v. Smule, Inc. considered the relationship between “at-will” employment and the prohibition in California Labor Code section 970 against employers inducing employees to relocate
and accept employment by way of knowingly false representations regarding the kind, character, or existence of work, or the length of time such work will last.

In White, White was terminated by Smule, Inc. after five months’ employment after White relocated with his family from Washington to the Bay Area. His termination was purportedly based on the elimination of his position.

White filed suit against Smule, Inc. in which he claimed Smule, Inc. had violated Section 970 since Smule, Inc. had induced White to move to the Bay Area based on Smule, Inc.’s Vice President of Engineering’s representations during the recruiting process that led White to conclude his job position was long term; that he would develop training protocols and manuals over the next couple of years; reorganize the project manager operations; and that his role would expand over time. Smule, Inc. moved for summary judgment on the basis that White knew he was an at-will employee and acknowledged he had signed an at-will employment agreement. Therefore, Smule, Inc. contended White could not have justifiably relied on the representations, so they were not false or actionable. The trial court granted summary judgment to Smule, Inc. and White appealed.

The Court of Appeal reversed the judgment. It determined that, while precedent held that at-will employment will defeat justifiable reliance by an employee on representations regarding long-term employment, it did not defeat justifiable reliance an at-will employment provision does not, as a matter of law, establish that an employee’s reliance on an employer’s promises regarding the kind, character, or existence of work the employee was hired to perform was unreasonable. Because Smule, Inc. failed to produce evidence showing that White could not establish justifiable reliance on this basis, it reversed the judgment. The Court of Appeal also reversed the judgment on the basis that there was a triable issue of fact regarding whether Smule, Inc. did not intend to
perform the promises regarding what White would be employed to do when these promises were made.

It is essential that employers consult with legal counsel before they engage with potential employees who must relocate to perform the work. It is essential that all such communications be vetted with legal counsel, precise, and, ultimately in writing, to avoid a White situation.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.