Legal Risk and Opportunity in Employment
In terms of cost and time, an organization’s ability to understand and prevent legal liability is immeasurable. NewCorp is currently mired in three legal encounters. Before deciding to immediately pursue legal advice to resolve the situations, NewCorp has decided to allow Team B to evaluate each encounter and determine NewCorp’s liability. Management has requested that the final evaluation be referenced with case or statutory laws that are relevant to the situations. Only after the results of each assessment will management decide whether to handle the situations internally or request further legal advice.
Legal Encounter One
NewCorp hired Pat ...view middle of the document...
According to InvestorWords.com (2010), liability is “an obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed” (p. 1). NewCorp provided Pat with an employee manual that stipulated the terms and conditions under which unsatisfactory job performance would be handled. As such, NewCorp is liable for the printed statements within the manual even if the material directly or indirectly negates NewCorp’s at-will policy. The Notice of Unsatisfactory Performance/Corrective Action Plan clause outlined in the personnel manual states:
If the job performance of an employee is unsatisfactory, the employee will be notified of the deficiency and placed on a corrective action plan. If the employee’s performance does not improve to a satisfactory level in the specified period of time, termination will follow (University of Phoenix, 2010, p. 1)
Because no corrective action plan was followed, NewCorp could be held liable for breach of contract. An employee manual could represent a contract, especially in those cases in which employees are required to sign them. According to Jennings (2006), many courts have considered employee manuals an implied contract because the employee has relied on the statements therein as a promise of sorts, which may fall under the legal principle of promissory estoppel. BusinessDictionary.com (2010) defines promissory estoppel as a “legal principle that a promise (even if made without consideration) is enforceable where the promisor makes, by conduct or words, an unambiguous representation to the promisee who relies on it to his or her
detriment” (p. 1). As a result, it would be unjust and unreasonable for the courts not to obligate NewCorp to stick to the terms of the implied promises within the personnel manual.
If Pat decides to pursue litigation and NewCorp is found guilty of breach of contract or promissory estoppel, NewCorp could be held liable for Pat’s lost wages after termination and any future lost wages for the duration of his contract. Pat could also sue for the cost of selling his home, finding another job, and relocating his family, and mental distress for himself and his family because his termination will undoubtedly affect his family and their financial situation.
Several legal principles apply in this situation. Although no statutory law applies because Vermont is an at-will state and is therefore not limited in its ability to terminate, Jennings (2006) describes a similar scenario in Case 18.7, Dillon versus. Champion Jogba, Inc. (2002). Linda Dillon, like Pat, experienced an unforeseen termination from an at-will company within 10 days of being hired for a new position within the company. “Prior to the termination, Ms. Dillon was never told her job was in jeopardy, nor did Jogbra follow the procedures laid out in its employee...