Thursday, October 6, 2016

Enforceable Promises

The very first item on our list of rules for employers is this: don’t make promises to your employees that you can’t or won’t keep.  Employers’ promises include those set out in employment contracts, of course, but there are others promises made by employers that can create legal liability and that are worth regular attention.  And it works both ways - employees, related businesses, and vendors may also be obligated by the agreements that they have made with you.
We think that employers should be familiar and comfortable with all of the employment law-related agreements and obligations they are party to.  Here are some of the most important things to look out for:
Obligations in written employment contracts.  This seems obvious, but we find that our clients sometimes lose track of what their employment contracts say.  We also find, particularly in organizations where employment agreements are routine, that contracts are prepared and sent for signature without much attention being paid to their contents.  Employment contracts are important, legally enforceable documents that should be reviewed, before signature if possible, to make sure that they:
  • reflect precisely what the employer and employee have agreed to; 
  • correctly state the conditions of employment and how the agreement will end;
  • correctly describe the employee’s compensation (and how it will change); and
  • obligate the employer to do only those things it is willing to do consistently.
Obligations in written policies and handbooks.  It is common, and good practice, for employers to include a disclaimer in their personnel policy manuals and employee handbooks, stating that the contents do not create a contract and can be changed at any time, with or without notice to employees.  If your policy manual or handbook does not contain such a disclaimer, we encourage you to include one, but until you do, you may be obligated to carry out the policies and procedures the manual or handbook describes.  Employees rely on policies and procedures described in the employer’s written policies, and when they do so to their detriment, courts and juries can be sympathetic to claims of breach of implied contract
Obligations of employees, related organizations, and vendors.  Promises made to an employer can be just as important as those made by an employer.  It’s particularly important to keep track of promises that relate to the protection of confidential information and to liability for non-compliance with employment laws.  We encourage you to review agreements with special attention to the following:
  • Do employment agreements appropriately secure confidential information? Do they protect your organization after an employee terminates?  
  • Do agreements with leasing companies, staffing agencies, or organizations with which you share employees address who will be legally responsible for discrimination, wage and hour violations, and other claimed violations of law?
  • Do vendors who supply HR-related services promise to protect personally identifiable information (PII)? What happens if PII is compromised as the result of a data security breach or some other event affecting the vendor?
Obligations created by government contracts.  Contractors need to keep track of what they promise the government in affirmative action plans and other provisions of the agreements they reach with federal, state, and local government entities.  It is easy to think of government contracts as separate from the obligations created in day-to-day operations, but they contain legally binding terms that may directly relate to personnel practices.  Does your affirmative action plan state that you will follow specific recruitment practices?  Does it promise that you will carry out personnel actions in a particular way?  Remember that government entities can and will audit contractors to determine whether or not they are complying with the promises made when their contract to provide goods or services was created.  If non-compliance is discovered, both the current contract and the right to be a contractor in the future can be put in jeopardy, so the stakes are high.

Posted by Laura Bartlow