Watch Your Compensation Contracts!

Posted July 7, 2017 by Mary McGinley

Without a doubt there is a difference from making an honest mistake at work and making a really big one. No HR professional wants to be the one who makes one that ends up costing $2,666,594.03.

According to a recent article appearing on the Inc. website, Francois El-Hayek, who had worked at Trico Products Corporation for 28 years was due to be laid off. The company agreed to pay him a severance package of 34 weeks of salary as a severance package for a total of $80,805.97. Trico’s HR manager, however, made a mistake when writing out the severance agreement and wrote that El-Hayek would instead receive the amount of $50,805.97per week. El-Hayek, noticing the error said nothing, and quickly signed it. When he began receiving his severance checks for the originally agreed to amount per week, he sued his former company.

In the end, the court sided with the company because El-Hayek, the plaintiff in the case, had not convinced the court of believing that the amount stated in the documents was indeed what he was supposed to receive. Further, the court said that El-Hayek had engaged in “inequitable conduct in the case. He court concluded that the plaintiff had in fact engaged in “inequitable conduct.”

So what’s an HR manager to do in order to avoid such a potentially career-destroying faux pas? Author Suzanne Lucas recommends that even if you have written legal documents in the past to leave writing legal documents such as severance or other documents where money is involved to the attorneys. She says that in her experience nothing should go out of the office until a lawyer has had a chance to review it first.

There’s no need to write documents for layoffs or termination from scratch. Lucas recommends having a database of such documents where the information can be filled in. It’s still a good idea for an attorney to go over them in order to ensure that the information is accurate. From there they can be further reviewed by an HR manager and a copy placed in the file of the employee who is due to receive the document. These are given to an HR representative and the direct report of the employee.

Each employee should be encouraged to take the severance or termination documents home and for them to be reviewed by their legal representative before signing them. When they are returned, Lucas suggests examining the returned document to make sure they are the same as those that the company issued. Unfortunately, embittered and clever employees have been known to match fonts on documents and print out documents that appear to be identical but aren’t. Nothing is final until all signatures have been attached.

Due diligence is Important, especially when legal documents are involved. As in the El-Hayek v. Trico Products Corporation, one word on a severance agreement can make a difference that can mean a huge loss for an organization. At EinsteinHR, we are experts in the field of human resource management. We work with small to medium sized companies to address all of their personnel needs.

No matter what your HR needs are, we are here to help. Contact us today to find out how.