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By Dan Cohen – 8/6/14

In the past two weeks, I have had occasion to review several employment applications. On each occasion, I was specifically asked to recommend upgrades.   Each of the applications was well designed for collecting information about the applicant’s qualifications. I would give them all high marks in this regard. But when it came to protecting the business against failure to hire claims and the full panoply of claims that employees assert, each application scored a “needs to improve.” This is not surprising to me as many businesses need to improve in the area of risk management. So, what were the common provisions missing from the applications?

  1. The At-Will Disclaimer—I don’t know of any employer these days that doesnot have an at-will disclaimer in their employment application, but I do know some that do not state that both employment and compensation can be terminated at will. I also know of others that do not have a non-modification clause and a superseding clause. The ability to terminate compensation at will allows you to reduce pay and benefits when necessary without facing the argument whether you can or not. The non-modification/non-superseding language is needed to prevent claims that someone modified the at-will nature of the employment relationship as well as claims that someone had made previous promises inconsistent with at will employment. The NLRB has gone as far as to reject at-will disclaimers where they are not subject to modification so it is important that the at-will provision contain a statement that it can be modified. You just want to make sure that modifications can only occur in writing, directed to the applicant/employee personally and only by the President of the Company.
  2. The Shortened Statute of Limitations—We have been able to get clients out of litigation early and on the cheap because of a reduced limitations period in the application. Most jurisdictions enforce these provisions. In Michigan, courts have repeatedly enforced provisions requiring applicants and/or employees to bring any and all claims against the employer within 180 days of the events giving rise to the claims. I say: why let an applicant or employee wait three years to pursue a discrimination case and up to six years to pursue a wrongful discharge case when you can reduce their opportunity to 180 days? If you choose to adopt this recommendation, make sure you require the applicant to bring suit within 180 days or any shorter limitations period so you don’t increase the 90 day limitations period for whistleblowers.
  3. The Jury Waiver—The days of significantly reducing your legal fees and greatly expediting the proceeding by arbitrating rather than litigating are likely behind us withthe advent of prolonged discovery and e-discovery in the arbitration forum. Keeping the case from a jury appears to be the remaining advantage of arbitration and because you give up your appeal rights in arbitration, I question whether arbitration is the answer these days. As I indicated in my April 22, 2014 Blog article about jury waivers, courts around the country and in Michigan have enforced them. The jury waiver accomplishes much that arbitration has to offer, without giving up your opportunity for summary dismissal at the front end and your appeal rights at the back-end.
  4. The Class Action Waiver—The Supreme Court has twice in recent years looked at the question of whether a class action waiver is enforceable and both times said they are. Although both cases involved a class action waiver in an arbitration agreement, lower court opinions have enforced similar provisions outside the arbitration context. As one federal judge noted, “there is no logical reason to distinguish a waiver in the context of an arbitration agreement from a waiver in the context of any other contract.” Palmer v. Convergys Corp., 2012 U.S. Dist. LEXIS 16200, *7 (M.D. Ga 2012). Opponents of such waivers undoubtedly will look to the D.R. Horton case where the NLRB found a class action waiver violated Section 7 of the NLRA. D.R. Horton, however, was rejected by the Fifth Circuit Court of Appeals. Although a decision on class action waivers has yet to reach Michigan, there is no reason to believe a Michigan court will reject them.

We have always preached that an ounce of medicine is worth a pound of cure. How hard is it to add a few more sentences to your certification? Be smart and upgrade your employment application sooner than later. It will take you less than an hour to do it and will save you a lot of money in the long run.