Loophole Snags Sneaky Employee

Here’s an example of the old saying: “If it sounds too good to be true, it probably is.”

François El-Hayek worked at Trico Products for 28 years, but was laid off when Trico was bought by another company. He went to a meeting where he and the other laid-off employees were told that if they signed agreements containing noncompetition, release, and other clauses, they would receive severance pay for 34 weeks, along with other benefits. François earned about $124,000 per year, so 34 times his weekly salary totaled $80,805.97. François got the separation agreement in the mail soon after the meeting. The contract, which had already been signed by Trico, said that François was to receive $80,805.97 per week for 34 weeks, for a total of about $2,747,400! François signed the agreement and sent it back to Trico.

When François was paid only $4,753.29 on the 15th and last day of each month, rather than more than the $160,000 required under the terms of the severance agreement, he sued for breach of contract. Trico then filed a counterclaim asking the trial court to reform the separation agreement to correct the mistake and reflect that a total of $80,805.97 would be paid to François.

At trial, Trico’s Human Resources Director testified that she mistakenly put in the separation agreement the gross amount of pay that François was to receive instead of the weekly amount. Trico argued that François knew or should have known about the error “but chose to keep silent to take advantage of the mistake.” François claimed that he had no knowledge of any such error, testifying that he believed a payment of $80,805.97 a week for 34 weeks was “fair based on my 28 years of service.”

The trial court ruled against François, and found in favor of Trico. Trico’s victory was affirmed on appeal, the appellate court noting that François’s “claimed belief that he would earn more in severance pay than he had earned in nearly 30 years of employment with defendant was unsupported by objective fact…[T]here is no reasonable dispute that … plaintiff knew that defendant did not intend for him to receive severance pay in the amount of $80,805.97 a week for 34 weeks. Nevertheless, plaintiff remained silent about defendant’s mistake.”

El-Hayek v. Trico Product Corp. 2017 Mich. App. LEXIS 1048 (Ct. App. 2017), lv. den. 501 Mich. 952 (2018)

What this means to you: Values are important. For example, all employees have a duty of loyalty and honesty to their employers.

At Fair Measures, we base all of our training courses on values, as well as on the law and your organization’s policies. One of the most important concepts we teach is that the law sets a floor for behavior, not a ceiling. Company policies can and should set a higher standard, while company and personal values represent the highest ideals.

Workplaces based on principles of respect and fairness are the best places to work. They attract and retain the most qualified employees, who are engaged and productive. And they prevent employee lawsuits.

Our training programs give managers the tools they need to implement these ideals and turn them into practice. If you want to keep your own organization a great place to work, contact us today to book curriculum for 2019 at 800-458-2778.

Posted 11-14-2018

Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.

2018-11-15T05:23:35+00:00

About the Author:

Ann Kiernan has litigated claims of wrongful discharge and discrimination before state and federal courts and administrative matters before the New Jersey Division on Civil Rights, the National Labor Relations Board and the Equal Opportunity Employment Commission, representing both employers and employees. Ms. Kiernan co-hosted The Employee Rights Forum, a weekly radio call-in show reaching up to a half-million listeners in the New York metropolitan area, and her articles on employment law have been published in many books and magazines. Both as a firm partner and as a director, Ms. Kiernan gained solid experience in management and human resources compliance. She has worked with Fair Measures since 1997.