By Jerri Lynn Ward, J.D., Garlo Ward, P.C
Posted May 28, 2002
If your company offers benefits to its employees, and uses those benefits to attract new employees, it is important that you know about a recent case so that you can avoid the problem encountered by the employer in that case.
If you are like most employers, benefit packages are subject to change depending on the economic condition of the business and the changing affordability of employee benefit plans. Therefore, when you are in the process of describing benefits as part of the inducement to get a prospect to work for you, it is important that you clarify that the benefit package is subject to change.
In Columbia/HCA Healthcare Corp. v. Cottey, ___S.W.3d__, 2002 WL 356514 (Tex. App. BWaco 2002), the Waco Court of Appeals upheld a jury verdict in favor of the employee that found that the employer had fraudulently induced the employee to accept employment with a misleading description of the benefit plan. The employer failed to provide the employee with a copy of the plan, or to explain that the employer had reserved the right to rescind the plan in its sole discretion. After two years of employment, the employer rescinded the plan. Although the employee knew of the rescission of the plan and continued to work for the employer for two more years, the court refused to rule that the employee had waived his claim. Apparently, the employee had complained about the rescission during the subsequent two-year period, which was sufficient evidence to the court that the plaintiff wasn’t agreeing to waive his claim.
Although, the benefit plan involved in this case was a profit- or investment-sharing plan, the reasoning would appear to apply in other benefit plans as well. The risk would come when an employer, for economic reasons, has to change to a plan with lesser benefits. Thus, it is important to clarify the economic realities of such benefits at the time of hiring a person.
All information in this article is informational only and is not legal advice. Should you have any questions or a situation requiring advice, please contact an attorney.
Copyright 2004 by Garlo Ward, P.C., all rights reserved
Austin, Texas 78752-3714 USA
Telephone: 512-302-1103
Facsimilie: 512-302-3256
Email: Info@Garloward.com
