Tag Archives: employee handbook

Are You Really An At-Will Employer?

The vast majority of private employers in California desire an at-will employment relationship with employees.  The vast majority also believe they are at-will employers.  They may be, but for a great many, it will take three years of litigation and several hundred thousand dollars to prove it.

It is often said that there are two types of employment: at-will employment and employment by contract.  This is actually a misnomer.  All employment is by contract.  It is either a contract for at-will employment or a contract for something else.  The most common alternatives to at-will employment are collective bargaining agreements in the union environment and individual employment agreements that provide for “good cause” termination.  In the at-will employment relationship, the employer is not required to provide advance notice of a termination decision and is not required to justify the decision with “good cause.”

It is also often said that in the absence of a written employment contract, all employment in California is at-will.  This is also a misnomer.  It is true that the Labor Code specifies at-will employment as the default employment relationship, but a written agreement is not necessary to overcome the default.  Oral agreements and implied-in-fact agreements can be entered which limit the employer’s rights to end the employment relationship.  Implied-in-fact agreements are the most problematic because the employer will not even know that it has entered into the agreement until the question is litigated and the court renders a decision.  A properly structured at-will employment relationship permits the employer to avoid this litigation.  It also provides the employer with flexibility in making decisions for operational reasons, and ensures that no judge or jury will later be called upon to second-guess the wisdom or fairness of the employer’s business decisions.

It is likely at least one half of the employers in California who think they are at-will employers are not.  Or, at least they are not in the sense that they can avoid extensive litigation by using the legal process of summary judgment to have wrongful termination lawsuits dismissed.  The problem arises because many employers, even the big ones, use borrowed or template documents.  Unfortunately, many of the attorneys and human resource professionals who write the documents lack a complete understanding of the law on at-will employment and they utilize documents which fail to properly establish the at-will relationship.  Employers who create documents on their own are at even greater risk for errors.  This is an area where the words and their precise placement really matters.

The most common errors made that interfere with the proper establishment of an at-will employment relationship are summarized below.

  • Relying exclusively upon at-will policy statements and agreements in employment application forms.  Courts have ruled that statements in employment applications are insufficient to prove at-will employment.
  • Relying upon at-will policy statements.  Courts have ruled that because policy statements are generally non-binding they cannot conclusively prove an at-will relationship.
  • Utilizing employee handbook language stating that the handbook is not intended to create a contract or contractual rights.  While that may be appropriate for most of the policies in the handbook, it can effectively wipe out any attempt in the handbook to create or confirm an at-will relationship.
  • Failing to utilize documents which create an at-will employment agreement. A key court decision that can be used to obtain summary judgment requires that the at-will nature of the employment relationship be set forth in an “employment agreement.”
  • Failing to control modification to the at-will employment agreement.  If a properly written at-will agreement can be modified without specific controls, the employer may be put to the burden and cost of litigation to prove that it was not modified.
  • Failing to integrate the at-will agreement.  Agreements that are integrated are much less likely to be subject to lawyers’ arguments and extensive litigation.
  • Failing to coordinate the numerous documents that may impact the at-will analysis. When the documents are not properly structured to work together in establishing the at-will relationship, there is an opportunity for lawyers’ arguments and litigation.
  • Failing to get good documents signed and failing to securely maintain them once signed.  Even the best designed documents are of limited value if they cannot be produced when needed.

Avoiding these errors can literally save years of litigation and hundreds of thousands of dollars in a typical wrongful termination case.  Even where an at-will employment relationship is not desired, these same types of errors can result in unnecessary litigation. 

Fortunately, the errors and litigation can be avoided.  Employers should start by taking the time to really understand the various forms of employment.  This includes the pros and cons of each form, and the elements necessary to properly establish each.  Regardless of the form desired, employers should take a comprehensive approach.  All of the documents which refer to or which may relate to the employment relationship should be audited. 

Once the audit is complete and the documents have been revised properly, attention should be turned to employee training.  Employees involved in the on-boarding process should understand the type of employment relationship being created and should be trained to avoid communications in interviews and communications in initial emails that may conflict with the desired relationship.  By following these steps employers will have surety in the type of relationship created and will avoid unnecessary litigation.

Social Media And The Insurance Implications

Most marketing and communication departments know all too well that social media and social networking sites are a treasure trove of opportunity for elevating your personal or corporate brand. Employees use social media for personal use, but also use it as a forum to talk about their boss, their company, their products, their problems and whatever else is on their mind. There are 200 plus social media sites in English alone, Facebook recently reached one billion users, and Twitter puts out more than 170 million tweets per day. That is a lot of free advertising!

However, what many businesses fail to remember is that, despite all of the positive aspects social media brings to a firm's marketing, communication, and sales efforts, it's also ripe with opportunity to damage their brand and cause a financial loss. While it's free marketing, it's also a lot of unedited content being published online that could be about your business, about your products, or attributed to you. Could a competitor feel that your employees are slandering their people or products? Could a competitor gain inside information about your organization? Could an employee divulge information that could get them fired? Could you or your employees inadvertently offend prospects and clients? In short, yes. As social media use continues to evolve and grow, it's important to consider this exposure to your organization.

Using Social Media To Generate Business Leads
All of this can be scary, but you can't ignore the great opportunities created by social media. Any organization not taking advantage of social media sites is signaling that it is not evolving with the times, and there is nothing close to matching the immediacy of broadcasting your news through social networking sites. A well-crafted social media strategy can generate a lot of interest in your product or services and drive traffic to your website where more specific information can be provided.

“In time, the proper execution of a focused social media strategy is an efficient means of staying in front of prospects. When the prospect has a business problem, your positioning as a credible, knowledgeable resource can help you get in the door and, hopefully, close the deal,” says Randy Stoloff, Director of Marketing and Social Media at AmWINS Group Benefits in Warwick, Rhode Island.

It is critical to have all content reviewed by someone within your organization that can be responsible for stopping improper content from being released. It's also important to review applicable insurance policies such as a website media policy or cyberliability policy to be sure social media activities are covered.

Using Social Media For Crisis Response
Imagine a time down the road when your best customers follow your social media feed and you need to get news out in a hurry about something that could cause your most prized customers harm. Assuming you have or hire qualified public relations professionals that can help you craft the proper way to phrase the announcement, you can get important news out immediately to show your concern for your customers and for transparency. Social media provides the most immediate way to communicate to your target audience. There are many insurance products currently available that assist with handling the public relations aspect of a crisis response. Having your social media presence established prior to a crisis will help you deal with the crisis in a targeted fashion.

Can Social Media Sites Be A Network Security Risk?
Besides the potential for hackers to use employee information on social media sites to figure out passwords, the sites can also be used to transmit computer viruses and other dangerous malware. As a result, many corporations block employee access to social networking sites. If the corporation has a cyberliability insurance policy in place, be sure it addresses security issues emanating from social media. The coverage may be limited to networks owned or controlled by the corporation.

Should I Address Social Media In My Employee Handbook?
This is a topic that requires legal counsel with experience in employment law as well as social media. It makes sense as a business owner to establish a guideline on what social media activities are permissible for employees, but it must be carefully worded. The National Labor Relations Board has published guidelines that may help. Most companies work very hard to establish a professional image and reputation. Employees often mistakenly think that commenting in social networking sites is somehow exempt from personal responsibility. The press is full of examples of disgruntled employees commenting on working conditions, complaining about their managers or coworkers, or commenting on confidential internal activities. Employees have been terminated for their conduct and they've sued for wrongful termination. You are likely to find coverage for the wrongful termination claims on your employment practices liability (EPL) insurance policy. Working with a professional is critical for navigating this minefield. You may not be able to avoid the litigation, but you can lay the groundwork for an effective defense.

Do I Need A Social Media Component In My Employment Contracts For My Executives?
Your top executives can also make mistakes using social media. Sensitive information can be leaked out accidentally by people who see the most sensitive information. Similar to non-executive employees, managers who have been terminated due to their social media activities have sued their employers for wrongful termination. Again, look to an EPL policy for coverage for that type of claim.

Should I Review The Social Media Content Posted By Job Applicants?
Many states have enacted laws barring employers from requesting full access to an applicant's social media profile. We have all heard stories about a prospective employer seeing improper pictures or comments by the applicant which influence the decision to hire or not hire them. Some employers have taken it one step further and requested login credentials from job applicants in order to see all the content they have posted. It seems like an obvious invasion of privacy, so laws are being written to protect the rights of job seekers. The claims that can arise from this scenario could have coverage apply under the “wrongful failure to hire” coverage on an employment practices policy, as well as an “invasion of privacy” policy as part of a cyberliability policy.

Scared Yet?
There are reasons to be concerned, but the opportunities need to be investigated with a proper foundation of preparation. It is also important to remember that there are insurance products available to help protect you after missteps. If you have an employment practices liability policy, you likely have some protection from wrongful termination claims and invasion of privacy claims brought by your employees. If you have an internet media or cyberliability policy, you could have remedies for allegations of libel, slander, defamation and invasion of privacy claims brought by other parties. A strong cyberliability policy will have protection from breach of security claims if hackers use social media to access your computer network for malicious purposes. It's possible that other insurance products can offer assistance as well. AmWINS represents multiple insurers with all of these insurance products and can help you select the proper coverage for you and your clients.