Tag Archive for: contract

Minnesota Supreme Court Holds that Employment Handbooks May Create Contractual Rights, Even When They Claim Not To

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Today, the Minnesota Supreme Court ruled in favor of employees. In an important ruling, the Court held that employers who use blanket language stating that an employee handbook is “not a contract” do not necessarily prevent employees from bringing valid claims for breaching a contract. The case, Donald Hall v. City of Plainview, reiterated prior cases holding that employee handbooks can, in certain cases, be legally enforceable.

In Hall, the City of Plainview promised to pay its employees accrued paid time off (PTO) upon separation from employment. But the City refused to pay Hall his PTO upon his separation. The City claimed that a blanket statement in its handbook stating that no provision was intended to create a contract was enough for it to avoid responsibility for paying the PTO. But the problem, the Court held, was that the company promised to pay the PTO in one part of the handbook, while also vaguely and generally claiming that it did not have to follow any of the promises it made in the handbook. The Court held that such duplicitous language is ambiguous and that, as a result, a jury had to decide what the contract actually meant.

The takeaway for Minnesota employees is that when even if an employee handbook contains a statement that it does not create a contract, courts may still find that the terms of the contract are enforceable. It is a good idea to consult with an experienced employment attorney in these situations.

Phillip Kitzer and Brian Rochel of Kitzer & Rochel, PLLP participated in the case on behalf of Minnesota NELA, who appeared as amicus curiae arguing in favor of employees.

If you would like to learn more, or if you have any employment law question, contact Kitzer & Rochel today.

I received a severance agreement, should I contact an employment lawyer?

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As lawyers representing employees, we are often asked when it is a good idea to have a lawyer review a severance agreement. The short answer is: almost always.

First, any severance agreement that releases legal claims (virtually all of them do) requires an employee to know whether they have any legal claims that they are giving up by signing the agreement. It is impossible to know the value of what you may be giving up without having a thorough evaluation of potential legal claims.

Second, most severance agreements are not clearly written and require employees to waive or limit rights that employees may not even understand. Frequently, severance agreements seek broad restrictions on the right to seek employment at other companies, to speak openly and truthfully, to pursue administrative claims, or to assist others who may seek legal action against a former employer, just to name a few examples. These terms limit the rights that employees otherwise freely enjoy.

Third, initial severance offers are frequently just that—an initial offer. Employers may be willing to negotiate the severance amount or offer other terms in addition to separation pay. The potential for negotiating terms of a severance agreement (including the total monetary payout) is well worth seeking sound legal advice.

The expertise of an experienced employment lawyer is valuable in understanding all of the terms in a separation agreement as well as in deciding how to respond to a severance offer. Nearly every severance agreement includes language that the employer encourages the employee to seek consult an attorney. That language exists for a reason. You can be assured that the company was advised by a lawyer; do not miss the opportunity and to seek sound legal advice of your own.

You must also act quickly, because nearly every severance offer has a time limit upon which an employer may withdraw the offer.

If you have received a severance agreement or have questions about your employment or separation from employment, contact Teske, Katz, Kitzer & Rochel today.

Ideas for Negotiating a Job Offer

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If you do not typically negotiate the terms of your job offer, you may want to consider doing so. There are many different aspects of a typical employment offer that you may be able to negotiate. If you do not, you may be selling yourself short.

Perhaps the biggest factor in negotiating an employment agreement is your salary or compensation for a job. During the initial interview, an employer will frequently ask what salary level you are seeking. This is the first misstep in most initial employment negotiations. You are not obligated to provide your prior salary history and doing so may hurt your negotiating position. At the same time, it is unwise to be rude or curt in denying to share salary information if you are trying to persuade an employer to hire you.

Here are some tips when facing this question:

  • Redirect: Ask what salary range the employer is offering (or what range a recruiter believes is realistic). Or say, “I am looking for roles in a range between $__ and $__.” Focus on what you are looking for, not what you earned in the past.
  • Ask for more information: Respond by saying that you need more information about the specific role or job you are seeking before you can comfortably answer what salary range you are seeking.
  • Directly address the question: You can politely say that you are not comfortable sharing that information or that it is private. In fact, sharing prior salary history can lead to direct or indirect discrimination. For instance, it well documented that women and minorities are generally paid less than men and non-minorities. Allowing companies to dictate pay based on previous salaries perpetuates these discriminatory norms. In some circumstances, seeking prior pay information may even violate the law. You should contact an employment attorney if you have questions about that.

At some point, if things move forward, you will be offered a position with a salary or a salary range. Of course, you will want to negotiate this term to get the best salary you can. Frequently, though, there is not much room beyond the initial salary offer unless there are unique circumstances (i.e. you have a competitive job offer, etc.).

Once you have been offered a job and settled on a salary, you can still negotiate several terms beyond salary. Many people overlook this potentially lucrative opportunity. Here are some terms to consider negotiating:

Sign-on bonus: these are more common than negotiating a salary increase, and are frequently agreed-to when job candidates push for them. This can make a significant financial difference when comparing competing job offers.

  • Vacation: negotiating one or even many additional vacation days per year is a very common term that employers are willing to give.
  • Stock options: Some companies offer stock options as part of an employment agreement. These can be very valuable depending on the financial health and future of the business.
  • Flexibility: working from home (even a few days a year or something like that), variable work hours, limited travel, etc.
  • Dues/fees: if you are obligated to maintain membership dues or association fees, negotiate your employer covering these. We have even seen employers pay for memberships at social or health clubs for the career networking value that the company receives. Similarly, you can negotiate paying conference attendance fees or travel costs. Be specific about these terms up front rather than waiting until after you are hired.
  • Tuition reimbursement: This is another common term for employees looking to advance their career—it can be a win-win for the employer and employee. But be very careful about provisions that require you to pay back any reimbursement amount if you leave the company.
  • Non-monetary items: Aside from terms that cost a company money, you can get creative about other elements of the job that help you advance your career trajectory. For instance, your job title or the number of employees that report to you may be items you can negotiate. This can make a significant difference in promotional opportunities down the road and can help you gain valuable experience.

You should also consider negotiating severance or separation terms as part of your initial job offer or employment agreement. We frequently have clients who quit, are laid off or are terminated and attempt to negotiate severance pay. In almost all cases, employers’ lawyers argue that those terms should have been negotiated at the outset of the employment relationship. They are right. As an employee, you are much better off having a contractual right to severance pay when you are let go than if you do not.

Many employers today require some form of non-compete agreement, non-solicitation agreement, or other restriction on your ability to work upon departing from the company. You can use that to negotiate some form of separation pay in exchange for agreeing to these restrictions. For instance, if an employer requires you to sign a one year non-compete, you can suggest that they include one year of severance pay if you are terminated under certain circumstances. This helps protect you in the event that you are suddenly fired and then bound by a restrictive covenant that limits you in finding a new job.

***The law on non-competes and other restrictive covenants is complicated and changes regularly. The same is true for law governing employment agreements. There are many factors involved in deciding whether to negotiate an employment agreement, and you should seek legal advice from an experienced employment lawyer before signing (or even negotiating) such an agreement. It is important to fully understand what you are agreeing to before you agree to anything.

Minnesota Court of Appeals Holds Restrictive Covenant against Employee Not Enforceable

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In a potentially significant case, the Minnesota Court of Appeals held that a non-solicitation agreement was not enforceable because it did not include specific reference to consideration in exchange for the agreement not to solicit within the agreement. The case, JAB, Inc. v. Naegle, resulted in the employee’s non-solicitation agreement being unenforceable.

Under basic principles of contract law, a contract (including an agreement for a non-compete or non-solicitation) requires consideration. This means that both parties receive something in return–here, the employer received the agreement not to solicit employees after the employee left the company, but the agreement did not provide anything to the employee in return. The important rule from Naegle is that, when a contract that cannot be fully performed within one year (such as a two year non-solicitation agreement), then the contract must include express reference to the consideration within the contract or it is not enforceable.

Click here for a copy of the full Court of Appeals decision. If you have questions about a non-solicitation agreement, a non-compete agreement, or any other employment law questions, please contact Teske Katz Kitzer & Rochel today for a free consultation.