The positive power of a contract

by Michael Haberman on July 16, 2014 · 0 comments


Contracts can both harm and help a company.

Contracts can both harm and help a company.

In my HR class we discuss that in HR you need to be careful not to create a contract with documents such as your handbook or by the actions of your managers. In past situations those “contracts” have offset other positive language that defended the company. If you promise something that goes counter to employment-at-will for example, then you stand the risk of losing to your “contract.” There are, however, situations where that contractual language may work in the company’s favor.

An example from New Jersey

According to attorney Ivo Becica, of Obermayer Rebmann Maxwell & Hippel LLP, the State of New Jersey has a two year statute of limitations on employers being sued, however, two years is a long time and employees or former employees are not required to file with any state agency before proceeding to court. Many employees would wait until the last moment, probably because they knew memories would fade thus enhancing their chances of a win in the employment lawsuit.

In the case of Rodriguez v. Raymours Furniture Company, Inc., the employee filed a lawsuit claiming retaliation for filing a workers’ comp claim and discrimination for a disability. He actually filed just 9 months after the incident but lo and behold the judge hearing the case disallowed his claim even though it was well within the 2 years allowed. Why did this occur? It was because of some contractual language on the company’s employment application.

The language that saved the day

On the company’s application the following language appeared:

I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH RAYMOUR & FLANIGAN MUST BE FILED NO MORE THAN SIX (6) MONTHS AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF THE CLAIM OR LAWSUIT. I WAIVE ANY STATUTE OF LIMITATIONS TO THE CONTRARY.

The statement was set apart from other language, in other words if was not buried and was not written in obtuse English. It was preceded by the warning “read it carefully before signing.” The court ruled that this language created an enforceable contract.

Takeaways

Attorney Becica offers some key takeaways for employers that I think may be applicable for states beyond New Jersey. He said:

  • Keep your waiver language simple and as short as possible. Translate this if necessary, depending on who your applicants are.
  • Make sure the period you suggest is reasonable, and he even suggests that 6 months is probably the shortest period you should use.
  • Use simple language that encompasses all employment claims.
  • Use set-aparts and boldfacing to really highlight the waiver.
  • Put that statement right beside the signature section.

This language will hold whether the application is paper or electronic. If it is electronic you need to make sure you probably say something about the validity of electronic signatures.

Naturally, lawyers are careful folks so Mr. Becica points out that this information is not to be construed as legal advice and I will pass on this statement as well, but it is darn good HR advice.


Sign up for free HR Solutions updates via email

Omega HR Solutions, Inc. uses creative human resource solutions to provide answers to time, money and service issues with employers and their employees. Visit our Products and Services page for more information or contact us to learn how we can help your organization.

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: