HR director Cheryl Swenson didn't wait for the standard severance package when the senior VP for human resources said her job would be eliminated.
Swenson contacted the president and CEO of her division and requested a more generous deal. She'd stay on the job for the next few months and forfeit outplacement services in exchange for 24 weeks of severance benefits. The CEO dated and signed a memo from her to that effect.
A few weeks later, the VP sent Swenson a letter saying the CEO had no authority to negotiate the severance package, which exceeded company policy, and she'd receive only seven weeks of severance pay. Swenson, an at-will employee, sued for lost wages and benefits plus damages.
Swenson's promise to stay on the job for a specified time equals the type of "consideration" needed in an agreement, a court said. It refused to throw out her lawsuit. (Swenson v. Legacy Health System, No. 9801-00584, Ore. CA, 2000)
Advice: Presidents and CEOs almost always have the power to bind their organizations to contracts. Require your employees to work through channels, and make sure HR and the CEO are clear about the division of authority. The exception: Your sexual harassment policy should offer alternative channels for complaints.
- How to Fire an Employee the Legal Way: 6 Termination Guidelines
- Title VII may apply to some independent contractors
- Think twice before suddenly withdrawing ADA accommodation that's been working
- Assess needs of employees, business before offering perks
- 'Rubber stamp theory' applies to Civil Service decisions, too