E. Effective Policies and Procedures

Even before the decision to hire a particular applicant has been made and the job is accepted in writing, companies can take other important steps to minimize discharge, breach of contract and other litigation stemming from alleged violations during the pre-employment relationship. This section will recommend practical strategies that should be implemented.

Employee Handbooks And Manuals

Effective personnel relations and a successful plan for litigation avoidance begin with an employee manual. In addition to giving employees a clear description of their benefits, a proper manual sets the rules for on-the-job behavior (i.e., reporting absences, authorized use of telephones, handling complaints, etc.), discusses criteria used for evaluating job performance, and reduces legal suits relating to "guaranteed" job security, unfair discharge and other claims. In addition, it may boost employee morale.

Despite these advantages, many companies do not use employee manuals; others fail to keep current with changing EEOC regulations and employment laws, and to incorporate such changes in their own publications. If staffing doesn't afford time to create a manual, this is one area where a company would be well advised to hire a consultant or lawyer to draft one. A few thousand dollars spent on a manual today can save you tens of thousands of dollars in a lawsuit tomorrow.

If the employer drafts a fair and reasonable policy which the employee violates, a jury is more likely to side with the company in the event of a lawsuit. Moreover, an employee who fails to exhaust the employer's internal complaint resolution procedures may find that his/her subsequent lawsuit is barred. In addition, a properly drafted manual one which discusses how workers are hired, evaluated, disciplined and fired will assist the company in discrimination lawsuits brought by disgruntled employees.

Remember, however, that your company must act according to the policies set forth in the manual, since the slightest deviation can create problems. Be aware that courts in many jurisdictions are ruling that manuals and handbooks can create contractual rights between employers and employees. Companies that fail to follow policies as presented in their manuals (e.g., if one were to terminate an employee without implementing progressive disciplinary measures called for in the manual), may be found liable for breach of contract.

When your company uses a manual or revises one that is presently being used, be sure to follow all policies and procedures contained therein. Although not recommended, it is not uncommon for manuals to spell out the following:

• Who is authorized to fire;
• Whether a firing decision must first be approved by a committee;
• Whether an employee must be given written reasons for firing;
• Whether a terminated worker can appeal a firing decision before it is effective;
• Whether a terminated worker must first be asked if he/she would be willing to take a job demotion;
• Whether an employee can be fired only for cause;
• Whether there are set rules regarding huge severance benefits;
• Whether a final warning must be given before a firing is effective.

The reason such clauses are not recommended is that the company may be giving additional rights to workers which are unnecessary. If your manual contains any or all of these provisions, or similar ones, you would be well advised to make sure that each successive step has been implemented before an employee is fired to avoid legal exposure.

Counsel Comment #36: Recent Supreme Court decisions and other legal developments indicate that companies may not be bound to promises in manuals regarding future medical, health and other benefits, provided clearly drafted and conspicuous language in the manual sufficiently states that such benefits may be eliminated or modified without notice, at the company's sole discretion. Be aware of this and be sure to review and amend your company's manual to take advantage of this recent development by drafting legally sufficient language where appropriate. For example, a company may state in the introduction that the booklet itself does not constitute an employment contract.

However, conspicuous language should be displayed throughout the handbook that the company adheres to the employment-at-will doctrine, which enables either the employee or the employer to terminate the employment relationship at any time.

Oral Promises

It's not unusual for job interviewers to be over-exuberant in their job descriptions, particularly when impressed by an applicant's qualifi- cations. This can lead to unrealistic expectations by the applicant over possible job security, advancement or expected benefits, with possible suits for damages. Since some courts may believe the applicant's version, avoid making such promises. Loose oral promises such as "the job is yours as long as you want it," or "you have a job with us forever," and similar words encourage disgruntled workers to commence lawsuits over what was intended, in turn, exposing your company to unnecessary and expensive litigation.

TIP: Courts in many states have held that conversations conducted in an atmosphere of critical one-on-one negotiation regarding the security of future employment or other terms may give rise to a valid, enforceable contract provided the use of such words can be proven.

Finally, watch out for oral statements such as "the job is open as long as you want it" to avoid potential liability and legal exposure in this area. It is also strongly recommended that you avoid inducing someone to resign from another position to take a job with your company, particularly if major relocation expenses and hardship are involved, without adequately protecting the company. This could be done, for example, by issuing a written agreement confirming that no promises of continued, long-term employment were given, even to the person relocating with great hardship.

Job Offers

When making a job offer, it is also important to clarify just how long the offer will be held open. Courts and legal authorities on the subject of hiring contracts have consistently held that when an acceptance to a contract of employment does not correspond with the offer in every respect, no contract is formed.

Counsel Comment #37: When offering jobs to applicants, you can be quite specific in the timing and manner of acceptance. For example, it may be a good idea to state what information, materials, data etc. the applicant must provide by the start date in order to begin the job. Making the job offer contingent upon receiving this information and requiring the applicant to sign a formal contract with non-compete and confidentiality provisions can provide your company with a number of options and legal strengths before the effective starting date. If the applicant refuses to sign such a document, that may be adequate grounds not to hire him/her.

Refusal To Sign Confidentiality Agreements

In many situations, a refusal by an employee to sign a confidentiality agreement document after he/she begins working can constitute misconduct and cause for discharge.

Counsel Comment #38: Confidentiality agreements should not be confused with non-compete agreements, whereby an individual commits him/herself not to compete with an employer for a designated period of time and in a designated geographical area after he/she is terminated. In many states, the refusal to sign an agreement containing a reasonable restrictive covenant will not constitute misconduct (although it may justify a termination) in the absence of additional consid- eration (i.e., two extra weeks pay, an additional week of paid vacation, etc.) offered by the company.