Avoid Potential Traps When Updating Employment Terms in Your Key Documents

23 November 2015 Labor & Employment Law Perspectives Blog

There is little debate that best practices for employers include periodically refreshing the company’s key employment documents like personnel policies, confidentiality and nondisclosure agreements. Quite often, there are similar provisions in several documents. Team members in different parts of the organization, such as human resources, the general counsel and members of a specific business unit, may make changes to key language. They may also make those changes at different times. Each of these factors can contribute to a risk of inconsistent or contradictory terms and the risk may not surface until a dispute about the terms in question arises. Courts will typically hold these kinds of inconsistencies and ambiguities against the employer.

Care must be taken to coordinate your company’s efforts to review and revise employment terms. Here are a few common problem areas to which you should pay particular attention.

Employment documents typically refer to potential disciplinary action, including whether or not the company has a progressive discipline policy. The policy may provide that an employee who demonstrates significant poor performance will receive a verbal warning, a written warning, and/or a performance improvement plan before termination. A typical disciplinary policy also identifies serious infractions for which immediate termination can result. However, an employment agreement may have a different list of serious infractions. It would not be unusual for the employment agreement to also incorporate the employee manual. What happens when an employee engages in serious misconduct that is not listed as being subject to immediate termination in his or her employment agreement, but is listed in the handbook? Does the agreement govern or the handbook? Can the employee be terminated immediately or should progressive discipline apply? You get the picture.

Another common inconsistency arises in language about reporting suspected harassment or discrimination. Policies may provide that an employee “should,” is “strongly encouraged to” or “shall” report the incident. One provision may require the employee to report the incident “to a supervisor” and another may require a report be made “to your supervisor.” Better language will require the employee to report the incident “in writing” and to provide detail so the company can undertake an adequate investigation.

Depending upon the language used, it is not difficult to anticipate a potential problem when an employee claims to have reported an incident of harassment or discrimination if that “report” consisted of a vague statement to a “supervisor” during a conversation about something else. Whether the incident was even “reported” depends on the language, but a company with vague reporting language will have a difficult time establishing lack of notice under these circumstances.

Confidentiality policies and agreements can be fraught with risk too. Definitions of “confidential information” can vary significantly from document to document as can the post-employment period during which the confidential information is prohibited from disclosure. One document may be silent about the duration of the confidentiality obligation and another may prescribe a specific term of years. There can also be a significant difference in provisions that authorize disclosure. Does the language require approval by “the company,” “the president of the company” or someone else? Must any approval be in writing? It is not difficult to anticipate a dispute when the company seeks to enforce the agreement and the defendant claims that “the company” approved their use or disclosure of confidential information for the benefit of a new employer by saying it was discussed with and verbally approved by a lower level supervisor.

While these differences in language can be subtle, the significance of the differences can be critical. Be on the lookout for discrepancies like these to ensure that gaps and inconsistencies are corrected in your periodic review of employment policies and agreements.

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