Legal issues from CTA’s perspective

by | Aug 14, 2023 | business law

James Doe interviewed for a position with the Chicago Transit Authority (CTA). He interviewed at their offices and during a break in the interview process, he was introduced to and briefly talked with the person who, if he was hired, would be his supervisor, Jane Smith. The HR Manager overseeing the hiring process brought Doe to her office in the building and then left the room to check on the person who would be conducting the next formal interview. Before they left, Smith was introduced to Doe by the HR Manager who stated that it would be a good idea to meet during this break since Doe would be working for Smith, if he was hired.
As they talked, Smith indicated that she thought Doe would be a good fit in her department and offered Doe a salary of $79,500 to take the job. Smith told him that it was a good salary and he should take it without negotiating because her feelings would be hurt and she might take any negotiating into account when determining his yearly raises in the future. She said in a joking tone, but Doe believed that she meant what she said. When the HR Manager came back to get Doe, Jane told the manager in front of Doe that it would be a good fit and to get Doe hired as soon as possible because they already talked about the job. The HR Manager nodded her head in a noncommittal manner and takes James to the next part of the interview.
James was offered a position at the end of the interview process and immediately accepted the offer. Because of his earlier talk with Smith and the HR Manager’s response to Jane’s statement to her, Doe did not discuss the salary when the offer was made and he accepted it. Doe was merely told to return the following day to fill out the paperwork by the HR Manager as he left.
Under CTA’s policies and procedures, only the Placement Department could actually give final salary offers. When Placement’s figure for James’s salary was computed, it was lower ($60,000), and this was the amount James was actually offered when he returned the next day to fill out the paperwork.
James sued to receive the higher salary offered by Smith. CTA claims that Smith had no authority to offer a particular salary and that it is not bound by her offer.
a. Discuss the legal issues under these facts from both CTA’s and Doe’s perspectives. (In doing so, please be sure to address what authority is and why it matters in this situation. What do you think each party will say about Smith’s actions?)
b. Who is likely to prevail if the case goes to trial? Why? (Is there any support for your position found in the cases referenced in the text? If so, be sure to discuss it)
c. Is there a way for CTA to honor Smith’s offer after it found out about it? What is this called and how would it work?
d. Do you think the law, as you explained it, is fair? Please be sure to explain why or why not?

 

 

 

Sample Answer

Sample Answer

 

a. Legal issues from CTA’s perspective
From CTA’s perspective, the legal issues in this case surround the authority of Jane Smith to offer a particular salary to James Doe. CTA claims that Smith had no authority to make the salary offer, as only the Placement Department has the power to give final salary offers. CTA may argue that Smith exceeded her authority by making an offer outside of the proper channels.

CTA may also argue that Doe should have been aware of the usual procedure for salary offers and should have sought confirmation from the Placement Department before accepting the offer. They may claim that Doe’s failure to clarify the offer with the appropriate department relieves CTA of any obligation to honor Smith’s offer.

Legal issues from Doe’s perspective
From Doe’s perspective, the legal issues revolve around the enforceability of Smith’s salary offer. Doe may argue that Smith had apparent authority to make the offer since she was introduced as his potential supervisor and explicitly mentioned that he would be working for her if hired. Doe could assert that he reasonably relied on Smith’s offer and accepted it in good faith.

Doe may also contend that CTA is bound by Smith’s offer due to the doctrine of promissory estoppel. He may argue that CTA should be estopped from retracting the higher salary offer because he relied on it to his detriment by accepting the job without negotiating with the Placement Department.

b. Likely outcome and supporting cases
If the case goes to trial, Doe is more likely to prevail. The doctrine of apparent authority suggests that CTA may be bound by Smith’s offer if she had the appearance of authority to make such an offer. In this case, Smith was introduced as Doe’s potential supervisor, and her position was acknowledged by the HR Manager in front of Doe.

Furthermore, the doctrine of promissory estoppel may support Doe’s claim. Promissory estoppel prevents a party from retracting a promise if the other party relied on it to their detriment. Here, Doe relied on Smith’s offer and accepted the job without negotiating with the Placement Department. As a result, he suffered a detriment by accepting a lower salary than initially offered.

One relevant case that supports Doe’s position is Hoffman v. Red Owl Stores, Inc. In this case, the court held that a promise made by an employer during pre-employment negotiations could be enforceable if the employee reasonably relied on it to their detriment. Similarly, Doe could argue that Smith’s offer created a reasonable expectation of a higher salary and that he relied on it to his detriment by accepting the job without further negotiation.

c. Honoring Smith’s offer
If CTA wants to honor Smith’s offer after finding out about it, they could potentially do so through a process called “ratification.” Ratification occurs when a principal (CTA) affirms and accepts an unauthorized act (Smith’s offer) performed on its behalf. By ratifying Smith’s offer, CTA effectively adopt and be bound by the terms the original.

For ratification to be valid, CTA would need to have full knowledge of all material facts surrounding Smith’s offer and still choose to affirm it. The ratification would need to be communicated clearly and unambiguously to Doe, indicating CTA’s intention to honor Smith’s initial salary offer.

d. Fairness of the law
The law, as explained in this case, can be seen as fair. It seeks to balance the interests of both parties involved in a contractual agreement. From Doe’s perspective, it is fair that he could potentially enforce Smith’s offer if he reasonably relied on it and suffered a detriment by accepting a lower salary.

On the other hand, CTA’s position is also reasonable as they argue that only the Placement Department has authority to make final salary offers. They may assert that Smith exceeded her authority and that Doe should have followed the proper channels for salary negotiations.

Overall, the law takes into account factors such as apparent authority and promissory estoppel to ensure fairness in contractual agreements and protect parties who rely on promises made during negotiations.

 

 

 

 

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