Client Alert - Employment Law Update
Federal Court Distinguishes Agreement From Contract in Wage Payment Suit.
The U.S. District Court for the Northern District of Illinois recently decided a case expanding employers' potential liability under the Illinois Wage Payment and Collection Act.
The case of Wharton v. Comcast Corp., No. 12-C-1157 (December 6, 2012) began when two technicians sued Comcast, seeking unpaid overtime. They sued under various laws, including the Illinois Wage Payment and Collection Act (the Wage Act). The Wage Act allows employees to seek unpaid wages that are owed based on "an employment contract or agreement." Claimants can sue not only the companies that employ them, but also their managers, officers, and other individuals directly involved in the failure to make required wage payments. It also provides for the recovery of attorney's fees, interest, and penalties. The technicians relied on various provisions of Comcast's employee handbook to establish the required agreement.
Comcast sought to dismiss the lawsuit by arguing that its handbook contained standard disclaimers, which state that the the contents were not intended to create a contract. Comcast claimed that the handbook merely contained guidelines that it was free to change at any time.
While the court did not disagree that the handbook was not a contract, it did conclude that it could still be "an agreement." In doing so, the court explained that a contract is an exchange of legally enforceable promises, while an agreement is merely two parties agreeing on certain terms. Based on this, the motion to dismiss was denied, and the case was allowed to proceed.
What to do
Handbooks are an important part of managing a workplace. However, this case illustrates how handbooks and policies can impact businesses in unintended ways. With the rise of wage and hour litigation, it has never been more important for employers to understand how to properly draft and implement the rules that govern their employees.
If you would like more information about this decision, or have questions about your employment policies and practices in general, please contact Mr. Gonzalez at 312-558-9779 or at egonzalez@elvisgonzalezltd.com.