I once defended an employer in a breach of employment contract lawsuit arising out of the early termination of a salesman's employment. The salesman was employed under a written, two-year employment contract. The salesman claimed that he had been involuntarily discharged in violation of his contract. The employer defended on the ground that the salesman had not been discharged; he had voluntarily quit. The lawsuit was settled on the eve of a jury trial in U.S. District Court. The lessons for employers to learn from this case are these:

     Review/Revise "Old" Contract Forms. Many employers use employment contracts which have been "handed down from prior generations." Sometimes these forms contain outdated provisions, especially if the employers' businesses have changed over the years. In the litigated case described above, the employee was employed under an employment contract form which "had been used for years," apparently without any modifications, although no one currently in the company knew the source or origin of the contract form or why it contained certain provisions. It was simply the "standard form" the employer had always used. During the investigation of this case, the employer's management learned that different regions or divisions of the company were using different employment contract forms. The lesson to be learned is this: An employer should periodically review, and revise if necessary, its employment contract forms.

     An Employment Contact May Provide For An Employment-At-Will Relationship. Many employers believe that if an employee has a written employment contract, the employee cannot be an employee-at-will. Some employers avoid using written employment contracts because of this belief. This belief is incorrect. An employment contract may provide for an employment-at-will relationship. Such an employment contract could expressly provide, for example, that the employee is an employee-at-will, who may be terminated at any time, with or without advance notice, and with or without cause, but the contract would also provide the other terms of the employee's employment and, for example, severance pay for a termination without cause. The lesson to be learned is this: An employer should not be limited in its employment relationships by any preconceived notions about what an employment contract means or what employment contracts "typically" provide; a wide variety of different provisions, including an employment-at-will provision, may be used in an employment contract.

     Management Understanding Of An Employment Contract. During the investigation of the litigated case described above, some evidence was developed that the employee's manager and supervisor, although they knew about his employment contract, did not know or understand all the terms of the contract, and in particular, their disciplinary proceedings with the employee were guided solely by the employer's standard disciplinary policies, without consideration of any particular contract requirements. This evidence had the potential of showing that the employee's manager and supervisor had unknowingly breached the employee's contract. The lesson to be learned is this: An employer must make sure that its managers and supervisors know about, understand, and follow any employment contracts that it has with its employees; this is particularly important with regard to (1) any discipline or discharge of an employee who has an employment contract, and (2) new managers or supervisors who take over the supervision of a contract employee previously managed or supervised by another person.

     Documentation, Documentation, Documentation. In the litigated case described above, the various alleged conversations about poor performance leading up to the final employment events were not documented by the employer, so during the litigation the parties repeatedly disputed who said what to whom at various times. This created a "messy" factual situation which prevented the employer from obtaining a summary judgment in the case. The lesson to be learned is one all employers already know: An employer must properly document important "disciplinary" or "counseling" conversations with an employee.

     Quit Or Discharge Clarification; Evidence. As described above, the main issue in the litigated case was whether the employee had quit or was discharged. This issue arose primarily out of an exchange of somewhat ambiguous phone mail messages between the employee and his supervisor. Unfortunately, by the time litigation commenced, the recordings of those phone mail messages were lost. The lessons to be learned are two: First, if there is any ambiguity at all about whether an employee has quit or been discharged, the employer should immediately clarify the situation and document that clarification; as a routine matter, all terminations, whether quits, retirements, or discharges, should be properly documented. Second, at the first sign of any hint of an employee or ex-employee asserting any kind of possible legal claim against an employer, the employer must immediately takes steps to preserve any possibly relevant phone mail messages, e-mail messages, or other possibly transitory types of communications with the employee.

DISCLAIMER: All information is provided for educational or promotional purposes only and not as legal advice on a particular matter. The information is provided AS IS with no warranties of accuracy, completeness, merchantability, or fitness for a particular purpose. Providing this information DOES NOT create an attorney-client relationship between Lawrence C. Winger, Esq. and the reader. All information is Copyright (c) Lawrence C. Winger, Esq. 2000 All Rights Reserved.

Dated: January, 2000
[Top Of Page]