Annual Distribution

Steven Cesare, Ph.D.

A business owner from Washington called me the other day to talk about some previous conversations he and I have had over the years. One interesting story involved a meeting he and I had with his co-owner several years ago on the topic of Employee Acknowledgments.

Having attended too many legal workshops, seminars, and update sessions to count, one ongoing theme that continues to resonate with me is that certain critical employee acknowledgment documents should be distributed to all current company employees annually. These documents include the: (a) Employee Handbook, (b) Arbitration Agreement, (c) Confidentiality, Non-disclosure, and Non-disclosure Agreement, and (d) the Sales Commission Agreement for employees (e.g., sales, Account Managers, Branch Managers) whose compensation may include commission pay. The purpose of such iteration is to reflect any annual modifications to company policies, goal criteria, or legal changes that require employee consent.

With that premise in mind, several years ago, during the aforementioned discussion with the co-owners, I calmly stated the company should distribute the Employee Handbook, Arbitration Agreement, and Confidentiality, Non-disclosure, and Non-solicitation Agreement to all current employees during January to document the beginning of the new administrative, legal, and fiscal year.

At that point, the co-owner became defiant, stating that since the company distributed those documents the previous January, and that the changes in them were minor, there was no practical reason to reproduce them again this year. In turn, I responded that maintaining the annual distribution process had significant legal, professional, and procedural efficacy worthy of continuance. The co-owner restated his opposition citing excessive duplication costs, wasted time, and rote concern for the company becoming bureaucratic.

This debate continued for quite some time. In general, I believe Human Resources should defer to management direction. However, given the sacred nature of these documents, I did not relent. Eventually, though disgusted with me (e.g., “you’re wasting a lot of my money Steve,” “think about how many trees you are killing Steve” and some other choice terms), the co-owner acquiesced. The documents were distributed in January, with every employee signing their three respective Acknowledgment Forms.

With that background established, the business owner recounted a story that ties this topic together. Apparently, during some difficult economic times thereafter, the company was forced to downsize, laying off several managers. One manager sued the company stating it had promised him a promotion and would not terminate him as part of that agreement. The case became ugly, personal, and divisive, eventually going to Arbitration (good thing we killed those trees to get that Arbitration Agreement signed!).

Based upon the recent phone call from the owner, I learned that during the arbitration hearing, the employee presented his case, while the company offered its rebuttal. At the time the verdict was made, the Arbitrator publicly claimed that he believed the employee was promised a promotion and that he would not be terminated. However, the Arbitrator then said, that he could not plausibly believe the employee’s naive position, because……..

Are you ready for it?

Due solely to the fact the employee had signed the At-will Acknowledgment in the Employee Handbook for four consecutive years.

Hmmm. I wonder where we heard that before?

Thus, the serial distribution of key documents with respective signed annual Employee Acknowledgments demonstrated convincing evidence that helped the organization avoid a very expensive financial penalty.

I wonder if the co-owner planted a tree in my name after he heard the verdict and its justification?

If you have any questions or comments about this topic or anything else related to human resources, simply call me at (760) 685-3800.