Beware making verbal promises

Employers that make verbal promises of workplace job security in order to lure job applicants or retain employees leave themselves open to claims of breach of an implied employment contract. Restrictions must be placed on all oral communications so promises don’t turn into contracts.

Statements made to entice a prospective employee have been used as fodder for breach of contract claims. Don’t allow statements meant to entice to be misinterpreted as employment promises by taking the following steps for a balanced approach.

• Lay out the essential terms of your employment relationship with a prospective employee.
• Make sure it contains language to the effect that “no other promises or representations have been made.”
• Avoid including the following kinds of statements:
  • After one year of satisfactory job performance, you will be entitled to…
  • We have a policy of promotion from within and you will be given consideration for any position for which you are qualified.
  • You will be considered a career employee, and we look forward to a mutually rewarding relationship.
• Consider putting the following statement, or a similar one, in every job-offer letter: “You should understand that you will be employed at-will, which means that either you or the company can terminate employment at any time. Nothing in this letter should be interpreted as a contract.”
• Provide an overview of the organizational structure, but don’t give the impression that the applicant is guaranteed to move up the ladder.
• Discuss facts about the company, such as products, profit margins, etc., but avoid expressing future expectations.

When employees question you about their job security, you must be careful how you respond. As much as you may want to reassure them their jobs are secure, doing so can destroy at-will status and create legal walls around your termination rights. Here are some pointers for avoiding promise problems.

• Remind employees who question you about job security that you cannot guarantee their future employment because factors, such as market trends and competition, can affect the business and their jobs in a number of ways.
• Increase your motivation and retention efforts. Clamoring for promises of job security could be a sign that employees don’t feel their hard work is being appreciated.
• Help employees understand that your inability to make a long-term commitment to them is of a legal, not personal, nature. Reiterate that this also means they are free to leave whenever they want—not that you want to see them go.
• Make sure employees are aware of at-will disclaimers by highlighting them on a regular basis. If the at-will disclaimer in the company handbook does not jump out, make it stand out by putting it in a separate box, using bold or capitalized letters, or using a heading.
• Don’t let veteran employees convince you that you’ve made an unspoken promise to them simply by retaining them. For example, one employee had over 20 years under his belt, plus a long record of raises, promotions, and favorable reviews. Therefore, he claimed he could be let go only for good cause. A state supreme court ruled that longevity alone does not alter an at-will relationship.

It is considered a breach of public policy to persuade an employee to relocate by making false representations about the work.

Here are some words to the wise when making relocation promises.

• Don’t operate from the assumption that the end result justifies any path it may take to get there. It doesn’t. Just because an employer wants the employee to agree to take the job it does not give him/her license to misrepresent the job’s responsibilities, potential opportunity, or security.
• It’s better to make no promises than to make false ones. In a time when structural changes like mergers and reductions-in-force have become routine, employees should be reminded that they are always employed at-will, even if they perform well. One of the best times to remind employees of your at-will policy is when they’re promoted or change jobs.
• When faced with what you think is a so-so relocation offer, lay out the “good news/bad news” equation for employees in some detail. Explain the possible risks and rewards in terms of the job, salary, staff, career potential, work environment, geographic area, etc., then let them decide.

4. What is the legal doctrine of “promissory estoppel”?

Promissory estoppel is a legal claim that binds an employer to fulfill a promise to an employee who, in good faith, relies on the employer’s actions even though there was no employment contract. The employee has to show there was a definite agreement and that he took action to his detriment in reasonable reliance on that agreement.