Happy New Year, they said to my wife and all her co-workers while handing out $5 to $10 an hour pay cuts effective the first of the year. Well, now they want her to sign the following letter as “acknowledgement” of her new rate. The work of a human resources consultant who apparently lacks any concern for the human.
“Your employment relationship with XXX is at will. Either your or XXX may terminate that relationship for any lawful reason at any time. In addition, working hours and schedules, facility assignments, compensation arrangements and other terms and conditions of employment may be modified at any time. You and XXX hereby acknowledge that no express or implied promise has been made of continued employment for any period or subject to any specific terms. You and XXX further agree that the at-will nature of the employment relationship may not be altered hereafter, except through a written agreement signed by you and an authorized officer on behalf of XXX.”
The above was received this past Tuesday (my wife had off Tuesday and Wednesday so she received it yesterday) with explicit directions to sign it and return it by today. Failure to comply would result in termination.
My wife was comfortable with the pay cut, but she (and I) have reservations about signing an at-will contract. What is the point really? Can this document be used to limit or remove the employer’s unemployment compensation if they elect to terminate her? Considering she was never under a formal employment contract, is it legal or legitimate to ask her to sign the above?
First of all, for legal advice it is best to consult an attorney.
Disclaimer said, you also need to let us know what State (or even what Country) your are asking about. What may apply to one state may not apply to another.
That said, when I was in HR in Indiana, those types of contracts were basically a formality to make certain the employee understood his employment could change at any time. Indiana is basically an “employment at will” state anyway. An employee could leave employment at will, and an employer could fire someone at will. Hence, employers could ask for 2 weeks notice, but couldn’t require it.
Denying unemployment compensation is not what an employer really wants to do. There are a lot of legal hasles involved, and if you aren’t completely justified in the denial it can create a lot more problems.
As RainbowDragon said, state employment laws vary, and it’s definitely a good idea to talk to a local lawyer if you have any reservations about signing a contract. In general, however, employment relationships are already considered at-will, i.e. you can be fired or quit for any reason or no reason at all. There are a few public policy exceptions (in many states they can’t fire you for participating in jury duty, for example), and the parties can always make an agreement on employment for a specific period of time.
As RD said, they may just be heavy-handed in clarifying the existing relationship. But considering the massive paycuts, this doesn’t sound like a solid company to be working for anyway. My totally uninformed guess would be that they’re anticipating layoffs and want to use these agreements as ammo in any resulting lawsuits.
Although I am not aware of the legal implications of the “at-will” text, my impression is that it’s a fairly standard clause for many types of jobs. However, I don’t think it’s used for union jobs or jobs that require a special contract (e.g., sports players).
There’s no such thing as an “at-will contract”. The point of this is to have a document to wave before the jury in case someone gets pissy and sues claiming some form of contractual right to the prior higher wage; the effect is to prove that the employee knew that she was a common-law at-will employee with no recourse in contract. It serves mainly to estop the disgruntled employee from seeking to claim that she had an “oral employment contract”. (I question whether the bit about “agreeing that the at-will nature of your employment cannot be altered” has any legal force; I don’t see the “peppercorn” for the employee.)
Unemployment compensation is based on state law and cannot be altered even by a contract without state approval; it certainly cannot be altered by a simple writing not amounting to a contract unless state law explicitly provides that it can (and I doubt that it does). The state will make its own determination as to the nature of the termination and this little document will have little if any bearing on that. I suppose that failing to sign it resulting in termination might be grounds for the state to claim that termination was “for cause” which, as I recall, alters UC, but you had best check with an employment attorney on that as the law in this area varies by state and I’m barely familiar with the law of my own state in this area.
The employer (in an at-will state, which I am presuming you are in) can require an employee to do just about anything as a condition of employment as long as it doesn’t violate anti-discrimination laws or the NLRA.
It looks harmless. Since, as you state, she has no contract, there is nothing wrong with signing it.
It has nothing to do with unemployment compensation. Nor does it affect her rights against illegal termination based on her age, race, sex, etc.
This type of statement is to protect the company by making it clear that only authorized officers can make binding employment agreements. As others have said, it sounds like layoff time.
A manager may tell an employee that he will try to get and employee more money; or in this case, get try to get the old rate back. The statement is your acknowledgement that the manager can not making a binding offer. The same for the manager telling the employ “we want to keep you”. The manager’s word is not binding, it must be in writting from an authorized company officer.
Here is an interesting side question regarding the OP:
A contract signed under duress is usually viewed as invalid. For example, if I hold a gun to Joe Blow’s head and force him to sign a contract, it is worthless.
Basically this is a forced contract “sign or your fired”. Sure the employee has the option of quitting, then again Joe Blow has the option of getting shot.
Would the fact that the employer created an ultimatum invalidate the contract?
I don’t think the threat of getting fired would count as “duress.” Getting fired is not seen as being harmed, it’s simply that they would choose not to use your services anymore.
Imagine if you went to your local grocery store with a contract which would give you a 10% discount, and threatened “If you don’t sign this, I’ll take my business elsewhere.” Would this count as duress and be an unenforceable contract if they signed it? No, because the threat to take your business elsewhere is not threatening to harm them.
Have you ever been fired?
Here you have zero income while you scramble for weeks to find another job. While interviewing for other jobs you have to explain your employment situation over and over again. While it isn’t life threatening, it certainly puts the employee under duress.
More so if the employee being fired cannot easily find work in his/her area.
Couldn’t possibly be duress because the grocery store has plenty of other customers available.
Most importantly there isn’t consideration on both sides, so that in itself invalidates the contract. The grocery store isn’t really promissed anything but the threat of lost business. The customer doesn’t actually promise anything.
The “economic duress” argument has rarely been successful. Once in a rare while a court has accepted economic duress as an excuse for performance on a contract, but the general rule is that duress has to be in the form of a physical threat.
And in the cases where the argument has been successful, the duress has generally been due to the unreasonable withholding of supplies for which the supplier has an effective monopoly or the like. Since (for all the trouble it causes) you generally can go out and get another job, I think you’d have a tough time making it stick in this case.
After reading the responses from KellyM and Enugent it is very interesting how the courts view the difference between physical duress and economic duress.
Physicians and hospitals complain all the time how managed care organizations dictate what prices they can charge. What does a family physician do when 90% of the employees in an area have the same managed care organization? They have the option to take what the MCO gives them, or try to make a business out of the 10% that aren’t in MCOs.
If they haven’t been able to fight off the MCOs with claims of economic duress, then perhaps it is extremely difficult…