Originally published on the Employer's Law Blog
Applying Connecticut law, a November 10, 2011 decision of the Supreme Court of New York, Appellate Division, First Department found a lifetime employment contract to be void as against public policy. The decision came in the case of Joan Banach v. Dedalus Foundation, Inc.
The Dedalus Foundation was founded and incorporated in Connecticut to foster public understanding and appreciation of the work of abstract expressionist artist Robert Motherwell and other modern artists. Shortly before his death, Motherwell sent a letter to the Foundation's president stating that the employee who then served as the Foundation's corporate secretary and a member of its board, shall remain an employee of the Foundation "as long as [she] chooses to remain." That employee later served as the Foundation's curator, then its director, and finally its vice president, before the Foundation terminated her employment. The employee then brought suit for violation of her alleged lifetime employment contract.
The court noted that "permanent" employment contracts are generally terminable at will under Connecticut law, though parties may enter into contractual arrangements that provide for employment terminable only for cause. Accordingly, the Court affirmed dismissal of the employee's breach of contract and promissory estoppel claims. First, the court found the lifetime employment contract void as against public policy. Because the employee held a key management position, her lifetime employment guarantee would effectively deprive the Foundation's board of the ability to direct the future of the Foundation. Second, the Court rejected the promissory estoppel claim because the employee had not alleged detrimental reliance upon the promise of lifetime employment and had not alleged that she would have been able to obtain other employment if she had chosen to leave the Foundation.
While this decision stops short of outlawing lifetime employment contracts, it recognizes that they are very difficult to enforce.
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