Promises, promises: Put incentives in writing; don’t let managers blurt them out — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Promises, promises: Put incentives in writing; don’t let managers blurt them out

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in Employment Law,Human Resources

Remind supervisors to avoid the temptation of making oral promises that they may not be able to keep, even if that means losing an employee who has another job offer. In New Jersey, if such promises don’t materialize, you hand the angry employee grounds for a “detrimental reliance” lawsuit.

Say, for example, an employee who hasn’t received a raise because your labor budget is tight tells you she has another job offer. You counter with a promise of more money or advanced training. The employee stays, but the perks never materialize. Employees can sue and win if they can show that they relied on your promise to their detriment, i.e., by turning down job offers.

If you want employees to reject other job offers, put any agreement you reach in writing and follow through. Then have them acknowledge that they have received the additional incentive and understand that they remain at-will employees.

Recent case: Gale Good worked for Linvatec Corp. as a sales rep. Unlike many other reps, she sold just one line of the company’s products. To sell the full line required up to two years’ advanced training.

When the company restructured, it offered most of the full-line sales reps distributorships or jobs with them. A manager told Good the company would train her in the full line, so she could work for a distributorship. But the training never materialized, and Linvatec eliminated her position.

Good sued, alleging detrimental reliance.

She lost because she hadn’t shown she relied on the promised training. She didn’t turn down a job, give up a job search or otherwise do anything that suggested she relied on the promise to her detriment. (Good v. Linvatec Corporation, No. 05-1930, DC NJ, 2006)

Final tip: As an extra layer of security, include a disclaimer in your employee manual stating that oral promises aren’t binding on the organization and employees shouldn’t rely on them.  

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