5/22/07
We’ve all seen them before: the handbooks that large corporations give to new employees on their first days on the job. They usually make for pretty boring reading, much of it in legal-eze.
But these are important documents, not only for large employees, but smaller companies as well, and I recently worked with a company after the owner learned this lesson the hard way.
Gabe started his high tech business after closing his 20 years of tenure at a Fortune 50 company, taking a $350,000.00 package along the way. His dream was to build a place where his employees would feel at home: safe and secure, unlike the years he’d spent at the corporate grindstone.
A year later, Gabe’s business had grown to five employees. His technical genius, Steven, was hired only 2 months after opening the doors and became the company’s third employee. After several months, Steven expressed his concern over the new company’s financial stability, and that’s where Gabe made his big mistake. In a good-hearted effort to help Steven feel more secure, Gabe, said, “It’s OK Steven. You’ll always have a job here.” Two other employees overheard the conversation.
Not long after that, Steven’s performance began to slip. He was frequently late and often left work incomplete. Gabe confronted him repeatedly, and finally decided that there was no other option; Steven had to go.
Three weeks after his termination, Steven filed a lawsuit claiming that Gabe had violated a verbal agreement that promised him perpetual employment. Steven’s attorney alleged that as there was no handbook outlining the company’s employment practices, and therefore his client had every right to interpret the statement “you’ll always have a job here” as an employment contract.
To make a long story short, the case never went to court and Gabe’s attorney was able to convince opposing counsel that there was, in fact, no real grounds for a lawsuit. But it was close, and in addition to the nearly $20,000.00 in legal bills, Gabe lost another employee who maintained a close friendship with Steven. Business faltered and service dropped as Gabe scrambled to replace his two employees.
He’s now back on his feet and growing again, but Gabe learned that a solid Employee Handbook not only expresses clear performance expectations, but states that he’s an at-will employer who can terminate anyone with or without reason or warning, and that nothing – save a written document signed by him – can change that.