Almost every business implements policies and procedures pertaining to business practices; hiring, business operations, employee relations to name a few. Have you ever wondered how well these policies would stand up in a court of law? Here is a true story with firsthand knowledge as to how one company’s act or failure to act resulted in an actual court decision.
I recently had the privilege to sit on a jury. The court action was a civil case where the plaintiff claimed failure of his employer to pay appropriate wages and wrongful termination based on retaliation for filing a wage related grievance.
As we (the jury) deliberated the case, we determined the company was in fact at fault for both claims. Although the termination was actually a layoff, the facts we found indicated it was wrongful and in retaliation to the plaintiff “blowing the whistle” on a wage issue that not only affected him, but could affect other employees of that company as well. Interestingly enough, much of our deliberation was regarding how this company wrote, altered and distributed their policies and procedures. Here is some of the evidence my fellow jurors and I reviewed during deliberation:
The company had a written Employee Handbook that included many common policies and procedures. This handbook was provided in hard copy form to employees at time of hiring.
Changes to policies were provided in “memo form” to employees when necessary but not consistently. However, management did maintain an updated, hard copy version of the handbook for their own use, which included the date of the latest revision. (ISSUE #1)
In the handbook there was a paragraph regarding Reduction in Workforce, which outlined a three-step process for layoffs, i.e. performance, skill set, tenure and pre-layoff notification of 10 days.
In April, the plaintiff, who was declared in court as the best performer, one of the more skilled, yet the one with the least amount of tenure, reported to his supervisor (second level of management) that he had filed a wage claim with the Dept of Labor. The supervisor allegedly never reported this to his Director. (ISSUE #2)
At the end of April, the Director (first level management) discussed with management the possible necessity of layoffs based on budget restrictions in the coming fiscal year (July).
In May, the Reduction in Workforce policy was amended; changing the criteria to tenure only and eliminating the notification process. This policy change was never communicated to employees, but placed into a new bound and printed handbook for management retention. (ISSUE #3)
Two days after the policy was amended, the plaintiff was laid off by the company for budgetary reasons based on the “fact” that he was the least senior person on staff (five years) (ISSUE #4).
Now understand that I have omitted many details regarding evidence, including how the Director may have learned that a grievance was filed. Regardless of omitted details, the points I wish to make come through loud and clear. Let’s review each noted issue and why it affected our decision.
Issue #1: Changes to policies and procedures are best provided in updated employee handbooks, provided to or at least accessible to all employees. Memos are a good means of notifying them of the change, however an updated handbook along with acknowledgements should be made available, printed or digitally, to employees; accessible at anytime.
Issue #2: Grievances or issues reported to the business should be handled appropriately and accordingly. Although this case involved the Dept. of Labor, think about how your company deals with whistleblower regulations, employee relation issues, theft or other reported issues? Are they properly reported, documented and handled confidentially?
Issue #3: Closely related to Issue #1, a policy change was made which would impact employment and not communicated to employees. Shouldn’t employees know about this policy change? (Note: Wonder why the policy was changed?)
Issue #4: To protect your company, any action effecting employment should be done properly. This means proper timing, proper documentation or based on substantial reason for the action. In this case, the layoff took place in May when their budget concerns were for the next budget year which began in July! What was the reason for the layoff?
Sitting in my jury seat, I recollected several companies that I have provided consulting services to whom, unfortunately handled policy and procedure (P&P) issues in a similar fashion. Even though this particular situation may not reflect how your company handles P&P, it is a reminder that how we conduct our business could end up in a court of law. What might be your deciding factors to determining guilt or responsibility in your business practices?Written by David Johnston, Director of Business Development