Why Plaintiffs’ Attorneys Hope That Employers Continue to Treat Employment Documents Like ‘Commodities’
One of the definitions of “commodity” in the Merriam-Webster Dictionary is “a mass-produced unspecialized product.” Commoditization is a concept that is bandied about regularly in the business world. The concept is now part of the legal landscape as well.
Increasingly, and alarmingly, employers (both for-profit and not-for-profit) are told that employment documents — such as handbooks, employment agreements, restrictive agreements, and job descriptions — can be borrowed from friends, downloaded from the Internet, and prepared by individuals who are not fully knowledgeable about the employment laws and relevant judicial decisions. All the while, plaintiffs’ employment lawyers silently pray that this dangerous trend continues uninterrupted.
The dangers of regarding employment documents as a commodity are aptly illustrated by the following “story.” The “story” involves a lawsuit filed on behalf of a group of employees on the grounds that their employer had failed to pay them for dozens, if not hundreds, of hours of overtime work.
The employer’s primary defense to the lawsuit was based upon the theory that the employees in question were exempt from the overtime laws and, therefore, not entitled to be paid for the many hours of overtime that they worked. During a deposition of a key company executive, plaintiffs’ counsel asked for the basis for the employer’s conclusion that the employees were exempt. The executive blithely explained that it was clear that the employees were exempt because that is how the company’s employee handbook characterized them.
This response prompted the logical follow-up question; namely, how did the company arrive at the conclusion in the handbook that these individuals were exempt. The executive responded that he had borrowed the handbook template from a friend, and assumed that everything that was contained in it was accurate. As it happens, the executive’s attempt to presumably save a relatively small amount of money by relying upon a handbook from a friend proved to be extremely costly. The handbook, as it turns out, was incorrect — the employees were non-exempt, and they were eligible for overtime pay.
The morals of the story are threefold.
First, employee handbooks (like job descriptions, employment agreements, restrictive agreements, job descriptions and other foundational employment documents) are not simple commodities that can be borrowed, downloaded, or prepared by those that are not fully informed.
Second, the consequences of legally defective employment documents are profound, and often include disastrous financial and other consequences.
Third, sound employment documents go hand-in-hand with sound business decisions. Simply put, sound employment documents (i) provide the foundation for sound hiring and other personnel decisions; (ii) assist in the proper alignment of employee/employer expectations; (iii) demonstrably increase the chances that employment relationships will be successful; and (iv) save countless hours and money.
It is painful to me to learn of employers with the best of intentions harmed by misplaced reliance on less than adequate employment documents. To be sure, such employers garner no sympathy from plaintiffs’ lawyers, who are keeping their fingers crossed that the trend towards commoditization continues unabated.
Marc Engel is an employment attorney and litigator at Lerch, Early & Brewer who regularly counsels clients on how to comply with state and federal employment statutes and wage hour laws. For more information preparing employment documents, contact Marc at (301) 657-0184 or [email protected].