The Downside of Handshake Agreements? Everything.
A not-so-fun note from a reader:
When I went to work for my former employer he gave me a ten year commitment, he said that he would give me a piece of the company if I stayed ten years. I stayed the ten years and when I asked him to make good he told me that no man in his right mind would expect him to keep a promise he made ten years ago. I quit two weeks later, and he kept my final weeks pay and the three weeks vacation pay I had coming. He had set precedent many times that he paid quitting employees their vacations but did not pay mine.
Furthermore, I worked many of those years as a salesman and a selling manager. Many of the manufacturers that the company represented paid a “retail salespersons spiff ranging from 100 to 500 dollars per unit sold. This same owner for ten years kept every single spiff for himself with now written agreement signed by me giving up this money.
This is not going to be great news for the reader but I’ll try to give him a little hope. Also, I’m not a lawyer so don’t print this off and take it to court.
Here is what you should definitely get:
- Your final week of pay - I would stop into the closest Labor and Industries office in your state and fill out a loss wage claim. You legally deserve to be paid for time worked.
What you could possibly get:
- Your three weeks of vacation - If he’s done it before in similar situations, you could get it back. No written policies make it difficult though. You can include that amount when you file at the L&I office.
What you’re probably not going to get:
- A stake in the business or a settlement for breach of contract - Unless the guy is an idiot, he’s not going to admit he made you the verbal offer a decade ago. Unless you can find someone to verify, you may be out of luck but I guess nothing is impossible.
What you’re not going to get:
- Your spiffs from the vendor - You signed a written agreement (seemingly the only written agreement in this whole thing). The only thing that I can see as a possibility is if those spiffs were in the sales contract between the vendor and the company you worked for. Then you may have a snowball’s chance in hell but more than likely, the vendor is going to recoup most of that.
Maybe other readers have some additional input here? What do you think, do you think the reader here has a chance with a stake in the business or spiffs?
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Your HR Guy is a Human Resources Generalist practicing in the field. But don't let that fool you, this isn't a boring blog. I seek relevance and humor in a place we will spend much of our lives. Everything from workplace issues, job seeking and terrible bosses. Read more...
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If the resigning employee is in California, he is probably entitled under the Labor Code to payment of his last paycheck PLUS all accrued but unpaid vacation pay within 72 hours. Otherwise, penalties start accruing against the employer plus statutory attorney fees.
As for the contract regarding ownership of the business or spiffs, the employee is probably out of luck unless he has written or other corroborating evidence.
In any event, he should talk to an attorney in his jurisdiction as the laws in each state vary.
My new slogan for boyfriends and bosses:
You don’t really mean it unless you put it in writing.
Here’s your contract law fact for the day (courtesy of my graduate business law course). There are 5 contracts that must be done in writing to be enforceable (called the ’statute of frauds’ -wiki it).
One of those states “Contracts that cannot by their terms be performed within one year from the date of formation” (restg deal with land, marriage, collateral debts, and sale of goods >$500).
So anytime an employer orally promises you something for work/service that will take over a year to complete, you have no contract.
@ Eugene - You’re right about all of those.
@ HR Wench - LOL
@ Sam - Great point. I didn’t know about oral contracts but I knew they were sketchy at best. Let’s just say I made sure my marriage certificate was signed.