Are business owners held liable for promises made during an interview?

UPDATED: May 31, 2012

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Are business owners held liable for promises made during an interview?

My wife was recently hired as an office manager/insurance producer for a nationwide insurance company. She was told and given paperwork that said that she would get 10% commission on new business sales and 20% commission on the renewal of those policies. After being hired, the branch owner told her that, “If a person without a policy walks in the door and she sells that person a policy, it is not new business because the person entered the building because of the owner’s advertising”. Is this not a breach of contract?

Asked on May 31, 2012 under Employment Labor Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

First, there is likely no contract, unless there was a promise of employment, with this pay structure, for a definite time (e.g. for one year). That is because without a definite period or duration, the employer is free to change the terms, conditions, and compensation of employment at any time, so there are in fact no fixed or definite terms, which are necessary to form a contract.

Second, even if there was a contract, this is more an issue of interpretation than enforcement: that is, the employer is evidently taking the position (interpreting the policy to mean) that your wife must generate the new business (e.g. find the leads), not merely sign someone who walks in the door without regard to your wife's efforts. While that's not the only, or even necessarily the best or most common, interpretation of "new business," it is a not unreasonable interpretation. That is not say that your wife could not win on this grounds, if she got over the hurdle of whether or not there is a contract in the first place, but she would have to sue to enforce her interpretation and it is not at all certain that she would win.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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