5 Necessary Policies for your Employee Handbook

There are several provisions that just about all employee handbooks should include. Let’s simply cover the top five. There are certainly numerous other important provisions to include in an employee handbook, but these five are critical and provide important protections for employers (both nonprofit and for-profit).

The employee handbook should make it clear it is NOT a contract. The employee handbook needs a “disclaimer.”

Under Iowa law it’s critically important to point out that the employee handbook is just that–a handbook–and not an employment contract. And, the employee handbook should not make any promises about continued employment. Consider using language similar to this:

I understand and agree that nothing in the Employee Handbook creates, or is intended to create, a promise or representation of continued employment and that employment at [Nonprofit/Company] is employment at will, which may be terminated at the will of either [Nonprofit/Company] or myself. Furthermore, I acknowledge that this handbook is neither a contract of employment nor a legal document.

When is an Employee Handbook not an Employee Handbook?

The employee handbook should make clear it trumps other, older policies and provisions. The employee handbook needs a “superseding” provision.

The employee handbook should make clear that it includes the most up-to-date guidance on company policies. Wording like this may be helpful:

This handbook and the policies and procedures contained herein supersede any and all prior practices, oral, or written representations, or statements regarding the terms and conditions of my employment with [Nonprofit/Company]. By distributing this handbook, [Nonprofit/Company] expressly revokes any and all previous policies and procedures that are inconsistent with those contained herein.

The employee handbook should make clear it is subject to change. It needs “wiggle room” language.

Paperwork on table

The policies in the handbook may well be subject to change. Of course, new issues arise, and you may need to make revisions. Consider using something like the following:

I understand that, except for employment-at-will status, any and all policies and practices may be changed at any time by [Nonprofit/Company], and [Nonprofit/Company] reserves the right to change my hours, wages, and working conditions at any time. All such changes will be communicated through official notices, and I understand that revised information may supersede, modify, or eliminate existing policies.

The employee handbook should make clear that employees are “at will.”

The employee handbook must be unambiguous about employees’ at will status:

Your employment is not for any specific time and may be terminated at will with or without cause and without prior notice by [Nonprofit/Company].

The employee handbook should contain an acknowledgment page.

Paper and computer

It is important the employee handbook includes an acknowledgment page that the employee signs and returns. The acknowledgment page should state that the employee understands it is his or her responsibility to read and follow the policies. The acknowledgment page should also be able to be separated from the handbook so that it can be signed by the employee and saved in the employee’s personnel file. Wording like this might be helpful:

I have received the handbook, and I understand that it is my responsibility to read and comply with the policies contained in this handbook and any revisions made to it.

________________________________________
Employee’s Signature

________________________________________
Employee’s Name (Print)

____________________
Date

TO BE PLACED IN EMPLOYEE’S PERSONNEL FILE

Does your employee handbook contain these five provisions? Why or why not? I’d love to hear from you. Give me a call at 515-371-6077 or email me at gordon@gordonfischerlawfirm.com.

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Employee Appreciation Day: How to Show Your Nonprofit Staffers You Care

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national employee appreciation day

If you manage a nonprofit undoubtedly you recognize that the mission couldn’t be driven forward without the hard work by talented staffers. Indeed, human capital is typically a nonprofit’s greatest asset! Today is National Employee Appreciation Day and the perfect chance to remind your employees that they make a difference. This is also an optimal chance to invest in employee retention; when you find the right people that work well as a team, believe in the mission, and have an admirable work ethic, it is important to keep them happy and engaged.

The nonprofit employee turnover rate is equal to other industries at about 19%. But, unlike other industries, the good news is that 93% of nonprofit employees say they are engaged at work which is three times that of other industries. More good news? 85% of employees who made the switch from a for-profit company to a nonprofit said they planned to continue working in the nonprofit sector long term.

Build an Even Better Nonprofit in Iowa

When it comes to nonprofit employment law best practices like an updated employee handbook and quality contracts are essential. But, taking care of your business beyond legal documents is also incredibly important. Here are a few easy ways to invest in your staffers on Employee Appreciation Day and every day:

Break out the Suggestion Box

Sure it’s kind of old school and basic, but a suggestion box can still give employees a chance to share their opinions to make the workplace better. Staffers appreciate the opportunity for another avenue of communication, and acknowledging legit concerns and ideas can only help the organization improve!

employees talking

Build a Better Break Room

Everyone needs a place to take a breather throughout the workday. Whether it’s swapping stories over lunch or sharing posters for upcoming community events, the break room should be inviting, clean, and comfortable. Take a hard look at the status of the break room and determine if furniture should be replaced, decor redone, or appliances upgraded. Even fresh flowers or an improvement in the type of coffee/tea provided can give morale a boost.

When is an Employee Handbook not an Employee Handbook?

A Little Recognition Goes a Long Way

We all loved to be recognized for our achievements, big and small, so do the bragging for your team. Without a doubt, your employees are doing wonderful things outside of the office from starring in the community theater production to coaching their kid’s sports team. Whether it’s a fun, quarterly recognition “party” or a “star wall” where you post compliments/accolades, find what fits with your organization’s culture. This also shows your team you care about them as people, not just as employees.

Thanks a Million!

It may seem obvious, but a simple thank you note can go a long way. Make it handwritten on a nice friendly actual card and it will speak volumes compared to the slog of usual emails.

Smart Employment Policies for Nonprofits

Fun & Career-Based Rewards

Little rewards for a job well done like a gift card to the movie theater or providing free pizza in the break room just because. Who doesn’t love an unexpected surprise treat? You can also consider career-related rewards, like paying for an employee’s online class of choice or sending them to an industry conference/event. This illustrates your commitment to investing in their continued education and benefits the nonprofit as well!

Any questions related to smart employment practices at your nonprofit? What are your best ideas to celebrate National Employee Appreciation Day? Don’t hesitate to contact me at gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

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6 of the Scariest Things Your Nonprofit Can Do

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Girl holding scary pumpkin

Horrifying. Blood curdling. Hair raising.

These are just a few of the adjectives that can be used to describe six of the scariest things your nonprofit can do (or fail to do). As a lawyer who regularly works with nonprofit organizations to help them succeed in pursuing their missions, these six items literally haunt my nightmares.

  1. Failing to have an employee handbook with necessary policies.

Spine chilling!

Seriously? How can you NOT have an employee handbook? An employee handbook (even if you have but a single employee) makes clear the rights and responsibilities of both the employer and employee. So many disputes can be avoided by a clear, easy-to-read, and direct employee handbook. One of your best bets to fight off this spooky scenario is to get my free guide to developing a quality employee handbook!

5 Necessary Policies for your Employee Handbook

  1. Merely copying a handbook off the Internet or “borrowing” it from another nonprofit.

Very eerie!

This is about as bad as not having a handbook at all! Just grabbing a random handbook and adopting it as your own makes as much sense as picking up a random hitchhiker on a foggy night. Others’ employee handbooks may have provisions you don’t need, or worse, ones you don’t want.

I once reviewed a handbook for small-but-sincere nonprofit that worked with the homeless. Several times in the handbook, quite specific medical terms came up—there was a HIPPA provision, there was talk about medical certifications, medical training, and proper handling of medical records. I realized, with a shock, this nonprofit had “borrowed” a handbook from a hospital.

How much faith or confidence will employees have in an employee handbook that’s filled with irrelevant stuff that clearly doesn’t apply to them at all? This is scary stuff, folks, very scary stuff.

Scary skeleton skull

  1. Failing to have an appropriate disclaimer in your nonprofit’s employee handbook

Truly frightening!

An employee handbook is just an employee handbook . . . or so you may think. But, what happens when it doesn’t have an appropriate “disclaimer?”

An employee handbook may constitute an employment contract! If you think about it, an employee handbook has all the elements of a contract—it’s written, it’s specific, it “promises” certain things will (or won’t) happen. It’s even “signed” by the nonprofit/company.

So, an employee handbook could actually be considered a unilateral employment contract unless the employer includes an appropriate disclaimer. Make sure you do so.

When is an Employee Handbook not an Employee Handbook?

  1. Not having adequate job descriptions

Terrifying!

Job descriptions are so important – for the same or similar reasons that employee handbooks themselves are needed. Job descriptions lay out in writing what is required of employees.

Job descriptions are also helpful in relation to what is now-called the American with Disabilities Act Amendments Act (ADAAA). Job descriptions demonstrate the “essential functions” (as opposed to non-essential) job functions of each position.

Also, strongly consider job descriptions for board members.

  1. Failing to have an acknowledgement page in your nonprofit’s employee handbook

Dreadful!

It is critically important your employee handbook include an acknowledgment page that the employee signs and returns. The acknowledgement page should state that the employee understands it is his or her responsibility to both read and follow the policies. The acknowledgement page should be able to be separated from the handbook, so that it can be signed by the employee and saved in the employee’s personnel file.

harvest moon

  1. Not making absolutely clear that your new employee handbook supersedes other, older policies

Ghastly!

Your nonprofit’s new employee handbook must make clear it trumps other, older policies and provisions. The employee handbook needs a “superseding” provision. This provision must state unambiguously this employee handbook is indeed the most up-to-date guidance on your nonprofit’s policies.

ghost in coffee mug

Wow, that was super scary!

After writing this post, I probably won’t sleep well tonight. But, if you follow these six pieces of advice you’ll rest easy knowing that you’re more likely avoid the nonprofit graveyard. If you’re facing these spooky scenarios don’t hesitate to reach out by phone (515-371-6077) or email to schedule a free consultation. You can also

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8 Clauses That Should be in Every Executive’s Employee Agreement

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business man with coffee

One time I gave a presentation to a group of professionals on “Essential Eight: Clauses That Should be in Every Executive’s Contract.” From my experience in nonprofit formation and compliance, it’s clear that great employment relationships start with smart employee agreements. This goes for both private and public, for-profit and nonprofit, organizations. An employee agreement ultimately benefits both the executive hire and the organization as it can minimize risk for both parties. (Remember, an employee handbook is entirely different than an employee agreement and certainly shouldn’t be mistaken for one!)

When is an Employee Handbook not an Employee Handbook?

A good employment agreement should clearly spell out the terms of the employment relationship and should include (in some form of wording or another) the following eight clauses highlighted below.

Executive employee agreement essential 8

Executive employee agreement essential 8 second half

Dispute resolution and forum selection sound a bit confusing? I would be happy to discuss these clauses in detail with you if you’re getting ready to hire a new executive, forming a new nonprofit, or are updating employee agreements. It’s never too early or too late to make sure you maximize the power of the employee agreement.

Contact me at any time to take me up on my offer for a free one hour consult!

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When is an Employee Handbook not an Employee Handbook?

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employees as a desk

An employee handbook is just an employee handbook…or so you may think. But, what happens when it doesn’t have an appropriate “disclaimer?”

Incorporate a Disclaimer

In addition to smart employment policies, all nonprofit entities should develop an employee handbook as a part of the onboarding/training process for all employees. The handbook, like other employment policies, serve the purpose of capturing the values you wish to instill in your workforce, outline the standards of behavior you expect, and provide a clear guide for rights and responsibilities.

Smart Employment Policies for Nonprofits

That said, an employee handbook can actually be considered an employment contract if you’re not careful. And, to best set out the parameters of the employment relationship, it’s best if the handbook and contract are two different documents.

If you think about it, an employee handbook has all the elements of a contract—it’s written, it’s specific, it “promises” certain things will (or won’t) happen. It’s even “signed” by the nonprofit/company.

An employee handbook could actually be considered a unilateral employment contract unless the employer includes an appropriate disclaimer, with wording like this:

“The policies, procedures and standard practices described in this manual are not conditions of employment.  This manual does not create an express or implied contract between the Nonprofit/Company and employees.  Nonprofit/Company reserves the right to terminate any employee, at any time, with or without notice or procedure, for any reason deemed by the Nonprofit/Company to be in the best interests of the Nonprofit/Company.”

Reasons to Enlist an Attorney to Write your Nonprofit’s Policies

Free Employee Handbook Sample

To make all of this more salient, I’ve compiled a free Employee Handbook guide that you can use as a sample guide to better understand how a handbook and a contract or agreement differ.

There are many reasons why an employee handbook should be just that and not also serve as an employment contract. I would be happy to review the employment documents you currently have in place or outline what documents your nonprofit needs, to ensure you have the best possible foundation for legal compliance. Shoot me an email (gordon@gordonfischerlawfirm.com) or give me a call (515-371-6077) and we’ll get your free (no-obligation) one-hour consultation scheduled.

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Expert Employers: Absenteeism & the Americans with Disabilities Act (ADA)

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man stretching at desk

For decades, employers enjoyed very wide latitude in disciplining and firing employees for attendance problems, even if the absenteeism was the result of illness or injury. That latitude has been significantly altered since the passage of the Americans with Disabilities Act (ADA) in 1990. Let’s explore how some of the policy implications of the civil rights law play out in the workplace. Don’t forget the ADA applies to nonprofit employers too, and non-compliance is not an option!

ADA Coverage

The ADA protects only “qualified individuals with a disability.” Disabilities as defined under the ADA can mean either physical or mental impairment that substantially limit one or more major life activities. It can also mean an individual who has a record of such an impairment or is regarded as having such an impairment.

 

group of people in line

A qualified individual must be able to perform essential functions of the job, with or without reasonable accommodation. What’s a reasonable accommodation? It may include the following (but is certainly not limited to):

  • Making existing employee facilities readily accessible for use by persons with disabilities
  • Modifications to work schedule
  • Job restructuring
  • Appropriate reassignment to a vacant position
  • Acquiring/modifying equipment or devices
  • Adjusting/modifying examinations, training materials, or policies
  • Providing qualified readers or interpreters

Tension Between ADA and Absenteeism

It can be difficult when an employee is absent for a health reason, and co-workers must pick up the slack, or the work simply goes unfinished. But, the employer risks violating the ADA if the company terminates or disciplines such an employee without first considering whether the employee is a “qualified individual with a disability.” If the answer is yes, the employee does fall under the ADA umbrella, then the employer must consider whether they can reasonably accommodate the employee. An employer is required to make a reasonable accommodation to the known disability of a qualified employee, if it would not impose an “undue hardship” on the employer’s operation. Yet another term that sounds ambiguous at its face, undue hardship is defined as an action requiring significant expense or difficulty with regard to things like the structure of its operation, employer’s size, financial resources, and nature of the industry.

Employers are NOT required to make an accommodation if it would mean lowering quality or production standards. (They’re also not required to provide personal items for use, like hearing aids.)

Of course, not all persons with a disability will need the same kinds of accommodation. Some examples relating to absenteeism include:

  • Abe was diagnosed with cancer and will be absent as he undergoes chemotherapy.
  • Betty has a chronic medical impairment in the form of diabetes and will need to attend related medical appointments in regular intervals.
  • Charlie deals with major depressive disorder, and a recent exacerbation of symptoms means he’ll need time to recuperate.
  • Diana will also need time to recover from surgery for her chronic back condition.

Practice Pointers

To control attendance problems without violating the ADA, you should:

  • Evaluate each situation (that is, whether the employee is qualified, disabled, or whether you can provide a reasonable accommodation) on a case-by-case basis while acting as consistently as possible with past practice and in accordance with your attendance policy;
  • Have a written attendance policy that emphasizes the necessity of good attendance, but also provides you with flexibility that you might need to accommodate a qualified individual with a disability;
  • Maintain accurate records of all absences, including a separate and confidential file for any medical certifications or medical information relating to an employee’s absences;
  • Be aware of the interplay between business/nonprofit policies and state and federal laws; and
  • Call your attorney when you have questions about your duties under the ADA. The saying, “An ounce of prevention is worth a pound of cure,” is smart to keep in mind!

Smart Employers Seek Advice

Again, nonprofit employers, remember the ADA applies to you too! The ADA can be a complex law, and it can get even trickier when trying to accommodate appropriately for absenteeism, while balancing business/nonprofit operations. Know you don’t have to navigate it alone. Questions? In need of counsel? Don’t hesitate to contact me.

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Hiring at Your Nonprofit? Interview Smart From the Start

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shaking hands over interview table

As a candidate for a job, we all remember those pre-interview jitters. You’re worried you’re going to say something awkward, fail to demonstrate your aptitude and experience, or show up at the wrong time in the wrong place. Maybe your resume has grammatical errors, or you’ll have food stuck in your teeth. And, then there’s that anxious thought that you may completely freeze up when asked a question!

But, the interview is not just a daunting affair for the prospective candidate. On the other side of the interview table, the process can also be worrisome to the interviewer! Employers want to make sure they’re hiring the most qualified candidate for the job, while also assessing if the prospective employee is aligned with the organization’s mission and will fit well with company culture. To achieve this, employers (for non and for-profits alike) must be well informed on how to conduct an effective interview. An effective interview requires at least two major components from the employer: carefully prepared interview questions and carefully phrased interview questions.

Choose interview questions with care

shaking hands over table with computer

Carefully prepared interview questions require the employer to determine the critical success factors of the job. Prior to the interview, employers should formulate a detailed job description along with a list of the qualities, skills, certifications/degrees, and previous work experience they are looking for in a candidate. From this, an employer should be able to formulate questions in advance, some open-ended and some not, to ask the candidates.

Avoid certain interview questions like the plague

If you’re hiring for a position you may feel like you can just wing it–one less thing on your to-do list, right? Wrong. There are interview questions and practices that could make the organization a likely target of an employment or discrimination lawsuit. While not illegal in the strictest interpretation of the word, any questions related to the following should be avoided at all costs:

  • Race and ethnicity
  • Sex and gender
  • Race
  • Country of birth/origin
  • Religion
  • Disability
  • Age
  • Marital/family status/pregnancy

Why are questions related to these topics not okay?

Phrase interview questions with care

As an employer, it’s not just what you ask, but how you phrase it. Let’s cover a couple examples:

Age

  • You cannot ask: How old are you?
  • You can ask: Are you over 18?

Asking a candidate about their exact age can lead to accusations of age discrimination or even unconscious ageism bias in hiring.

The concern here can be whether the candidate is old enough to perform the work they are interviewing for, so ensuring that the candidate is legally old enough to work is sufficient. Child labor laws exist to prevent exploitation of minors and mean to make sure education is a higher priority for minor students than work. So, if your organization is considering hiring minors for entry-level part-time roles, make sure you have full understanding of the restrictions on the types of work that can be completed, maximum working hours, and late-night work hours limitations. For instance, work permits are mandatory in Iowa for minors under 16 and violations of limitations and permits come with civil penalties.

watch on wrist

Of course, age discrimination can go the other way too. For instance:

  • You can’t ask: How long do you plan to work until you retire?
  • You can ask: What are your long-term career goals?

According to a survey of older workers by the AARP, not getting hired is the most common type of age discrimination they experienced. An additional 12 percent of older workers say they missed out on a promotion because of age, and eight percent say they were laid off or fired due to their age.

Children and family

  • You cannot ask: Do you have children?
  • You can ask: Are you available to work overtime on occasion? Can you travel for work?

Asking a candidate about children can lead to gender and/or family discrimination. The fact that someone does or does not have children should have no bearing on consideration of the candidate.  The concern here is whether family obligations will interfere with work. Asking directly about the candidate’s availability should be sufficient.

In a similar thread, you cannot ask a female candidate if/when they plan to become pregnant. The Pregnancy Discrimination Act means employers cannot discriminate on the basis of childbirth, pregnancy, or medical conditions related to pregnancy.

two kids on scooters

As an employer, you also cannot condone Family Responsibilities Discrimination against caregivers under the Family and Medical Leave Act (FMLA). This means prohibiting discrimination against prospective and current employees who take leave from work if they have to care for a new baby, aging parent, or sick kid.

Marriage

No one is required to tell you as an employer their marital status or any marriage plans.

  • You can’t ask a female candidate: What’s your maiden name?
  • You can ask: Have you ever graduated or held a job under a different name?

Marriage - bride and groom

Physical abilities & health

  • You can’t ask: How tall are you and how much do you weigh?
  • You can ask: Are you able to perform the specific duties of this position such as lift a box weighing 50 pounds or reach items on a certain size shelf.

Asking for personal details about someone like their weight or height aren’t just “banned,” but they can so be incredibly uncomfortable for the interviewee. Some jobs do require specific physical abilities, but don’t make assumptions about a candidate based on appearance. Ask only direct questions related to what’s required of them.

person walking down path

The Americans with Disabilities Act (ADA) is another super important employment-related law under this category, as it prohibits workplace discrimination based on a person’s disabilities. The ADA defines disability as, “A physical or mental impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment.” A good question to ask avoid questioning physical abilities while still gauging if the candidate can perform the job is: “Are you able to perform the essential functions of this job with or without reasonable accommodations?”

Transportation & residence

people on subway train

  • You can’t ask: How far is your commute?
  • You can ask: Are you able to start work at 8 a.m.? Or, are you willing to relocate?

Asking a candidate about where they reside can lead to location discrimination. The concern here should be whether the candidate can regularly show up to work on time. Ensuring that the candidate is able to make it to work on time for a shift or open of business is sufficient.

What else can you ask?

Don’t let all of this scare you off from interviewing and hiring the great people you need to carry out your mission! There are plenty of questions you ask that get to the important stuff related to qualifications, experience, behavior characteristics, and career goals, such as:

  • Tell me about your past work experience.
  • What are you looking to gain from this position?
  • Tell me about you previous experience managing teams.
  • What languages do you speak, read, and/or write fluently?
  • Previously, have you ever been disciplined for violating company policies regarding the use of alcohol or tobacco products?
  • Tell me how you became interested in this industry?

By carefully preparing and phrasing questions in an interview setting, nonprofit employers can minimize legal risks while eliciting information they actually need from job candidates to inform successful hiring decisions!

Interview with the right intel

two people sitting at table

It’s okay to have questions about nonprofit employment decisions like the interview process. It’s better to do it right and be legally prepared for it from the beginning to protect your organization against allegations of discrimination and potential litigation. This dedication to excellence in employment law should then extend through the entire employment process with tools like the ever-important employee handbook and well-crafted executive agreements.

Don’t hesitate to reach out to GFLF via email or by phone (515-371-6077)

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Legal Phrase of the Day (Brought to you by Stormy Daniels): Breach of Contract

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The latest lawsuit to grip the U.S. news cycle has all the makings of an interesting drama complete with pseudonyms, an agreement to “hush,” a payment for $130,000, and an absent signature. That missing signature is, in part, what brings us to an adult film actress’ lawsuit that a 15-page agreement between “Peggy Peterson” and “David Dennison” concerning an alleged affair with the president is null and void. How? The actress/stripper/director, Stormy Daniels (legal name: Stephanie Clifford), and her attorney, Michael Avenatti, filed their complaint on the bases that that the contract is unconscionable (unreasonably excessive) and invalid since Trump never personally signed. There are also allegations of coercion and physical threats against the actress by the opposing party to stay silent about what she knew about Donald Trump.

If the agreement is found to be invalidated, that would fling open the door for Stormy Daniels to publicly share her story involving Donald Trump without having to pay any damages to Trump’s attorney, Michael Cohen, who brokered the deal.

Daniels requested declaratory relief from the agreement—which Trump’s representatives are intent on enforcing—and even offered to return the $130,000 payment she received.

Many words could be written on the potential legal avenues both sides of this suit could pursue. But, with a CBS “60 Minutes” interview with Daniels slated to air this month, let’s zoom in on one important aspect of the agreement in question: breach of contract.

Even if you’re not suing Trump, we all enter into contracts and agreements, large and small, as a part of living in a modern society. Knowing what breach of contract means could have implications on partnership agreements, residential leases, and employment contracts, among many, many other kinds of agreements.

Legal & Binding

Suit on stairs

Before we dig into how a party can breach a contract, let’s establish what a contract actually is. A contract simply refers to a promise between two or more parties that establishes binding legal duties on the parties, such that the contract can be enforced in a court if necessary. While there are still major differences between states regarding contract law (i.e. a contract valid in Iowa is not necessarily binding in California), under the legal framework of the Uniform Commercial Code and common law, there are necessary provisions for all legally enforceable contracts in the U.S. The major requirements include (but are not limited to): (1) offer; (2) acceptance; (3) legality of purpose; (4) intent; (5) “competent” parties; and (6) consideration. Let’s look at each of these requirements:

Offer

An offer must be made. Of course, you know what an offer is in general, but in the legal world a contract offer means it must include three parts-

  1. The offering party must make a statement of intent to enter into a contract.
  2. Terms must be specified with a specific proposal.
  3. The offer must identify the party who is receiving the offer. a communication that identifies the person to whom the offer is made.

If any of these elements are not present, an offer has not been made.

There’s no one proper way to make an offer; it could be made via email, letter, text message, telephone call, and even through behavior.

Acceptance

This requirement seems like common sense—the offer must be accepted by the other party. But, like the offer, there are certain aspects that must be present in the acceptance. For instance, an offer must be accepted in the way that the offering party authorizes. (Example: an offer you received by email could specify that acceptance means signing and mailing back to a specific postal address. Another example: a grocery store coupon in the newspaper must be used, or accepted, by a date certain or it expires.)

Plus, an offer can only be accepted by the party to whom the offer was made, unless there’s a power of attorney or other authorization of another agent to accept on the party’s behalf.

Let’s say you receive a job offer with a new employer. That’s exciting, but you’re going to want to give the offer in the form of an employment agreement a thorough review. If you review (and consult with your attorney) and decide there are terms you don’t agree with, you may suggest changes and send your counteroffer back to the prospective employer. The edited, updated version of the contract you suggested could be accepted or rejected by the employer. Without acceptance of the agreement from all parties, there is no agreement.

This is one of the elements Daniels is asserting in her lawsuit against Trump—that the existing agreement is not valid and enforceable since one of the parties, David Dennison (AKA Donald Trump), never signed the written contract.

Legality

For an agreement to be enforceable, it must be made for a legal purpose. In other words, a contract’s subject matter cannot violate public policy or be deemed illegal. For example, a “contract” involving the sale of heroin would not be enforceable. If some parts of a contract violated either a state or federal statute, while the other parts were legal, and the two could be reasonably separated, only the aspects of the contract that were lawful could be enforced.

Intent

Sometimes referred to as “mutuality of obligation,” this necessary provision means that both parties to a contract must have a similar intent for the contract. So, if one party to a contract had been shown to purposefully misled or defraud the other party on the terms of the contract, then the contract could be nullified. Basically, everyone involved needs to enter into the contract honestly.

If you were to take a contract to court with the allegation that there was a lack of mutuality of obligation, the court would likely review records and communications that were used in creating the contract. This would provide evidence and a basis for the court to determine if an agreement on intent was actually absent at the time of drafting and execution. For that reason, I typically recommended my clients keep records of communications regarding contracts for a reasonable amount of time.

To go back to our Trump lawsuit example, intent also comes into play. Daniels has asserted that she was coerced into signing the agreement, and therefore there’s a lack of intent since, if this was the case, she wouldn’t have entered into the contract entirely freely. If proof can be found of blackmail or other types of intimidation, a court will rule the contract lacking in validity and thus unenforceable.

Man looking at grey building

Competency

Parties that enter into a legal contract must have the competency and capacity to do so. People who are limited in their ability to enter into a contract include persons who have been deemed mentally incompetent, or temporarily incapacitated in the case of being under the influence of drugs or alcohol, and minors (unless they have been legally emancipated). This requirement ultimately provides protection for both parties.

Consideration

This essential part to a valid, enforceable contract is actually quite different than it sounds. Instead of simply “considering” the agreement, this means that both parties need to provide something of value. Consideration could be a good, service, money, or even benefits. What if there isn’t consideration on both sides? Then the agreement creates the situation for a gift instead of a contract.

To use our previous employment example, the consideration in most employment contracts is the exchange of a service (the work) for money (such as a salary or wage).

All or Nothing

It’s not good enough if just two or three of the elements are present—all aforementioned requirements must be met if a court is to find a contract legally enforceable and binding. 

Breach of Contract Video

Click the image to watch an easy-to-understand video on “breach of contract”

Does a Contract Have to be in Writing?

A question I receive often is if every contract must be in writing. The short answer is no, but it’s a good idea whenever possible, especially in any business contract. Plus, under the intimidating-sounding Statute of Frauds, written contracts can be necessary for certain agreements to be enforceable like those involving real estate transactions, marriage, and long-term contracts (where duties cannot or will not be performed with one year of execution). That being said, if all the required elements are present in an oral agreement (and could be backed-up if necessary) a valid, enforceable exists.

Statute of Frauds mnemonic device

Breach of Contract

Now that we’ve established what a contract is, what’s a violation or breach of a contract mean? A breach of contract occurs when either party in the legal, enforceable agreement fails to perform their duties as outlined in the contract. When a breach of contract occurs, the other (injured) party can be entitled to a remedy, typically monetary damages. In theory the monetary remedy is to be an adequate substitute for the contracted duty and that it will set-up the injured party to be in the same position had the contract never been breached.

breach of contract definition

This makes a lot of sense when you consider real-world scenarios where the monetary remedy could be used to enlist a substitute. Let’s say you’re remodeling your house and you contracted with ABC Construction to redo your kitchen. You contracted with ABC Construction based on the fact they quoted you a lower cost for the remodeling services than XYZ Construction, the only other company that performs similar services in the local area. For whatever reason, the company refuses to complete their end of the contract; they fail to show-up multiple times and you can’t get in contact with them. If the contract were legal, you could sue ABC Construction for breach of contract, and ask for monetary damages (likely equal to the higher cost of services from XYZ Construction), since ABC failed to complete their end of contracted duties. As you can see, the money remedy “restores” your economic position to that as if ABC never breached.

In almost all cases money damages are the go-to remedy for contractual performance, but there are few exceptions. Specific performance of the contracted duties can be required in unique situations where cash is not sufficient to adequately compensate the non-breaching party. Real estate offers a common example where specific performance is often required. Let’s say a valid, enforceable written contract is executed for Alan to sell Bert his house at a certain rate, but then Alan later decides he doesn’t want to sell at all. Because there is no property just like Alan’s house, Bert may be entitled to specific performance of Alan going through with the sale.

The injured party can also be entitled to contractual performance if a total value of damages cannot be calculated.

Other remedies an aggrieved party can pursue in a breach of contract include recession from the contract (terminating the contract); quantum meruit (a fancy latin way of saying “what one has earned” meaning in contract law a recovery of the value of labor and materials); and injunction (a court order for a party to do, or cease, specific acts).

Breached Mnemonic Device

Let’s take it back to the 2016 nondisclosure agreement between Daniels and Trump (or, rather, Trump’s attorney Michael Cohen). The agreement asserts that if Daniels breaches the contract (meaning she discusses information about Trump in relation to the alleged affair) the remedy will be $1 million for each violation on top of any compensation Daniels earns from disclosing information about Trump. At this time, Cohen filed papers in a federal court reportedly seeking $20 million in damages from Daniels for 20 supposed breaches of the agreement. Which circles back to Daniels’ legal argument that she is not required to pay any damages; no breach of contract occurred as there was no valid contract to begin with.

On top of all this, the clause for $1 million in liquidated damages per breach is debatably a penalty clause. “Because penalty clauses are generally not enforceable under contract law, a court will construe an excessive liquidated damages clause as a penalty clause and will simply not enforce it.” (Note that liquidated damages are defined as specific sum of money parties agreed to and wrote into the contract. This is the amount the injured party should be paid if the other party breaches certain aspects of the contract.) Then, there is the question if the agreement and payment of $130,000 violated campaign finance laws.

So, needless to say, the Stephanie Clifford a.k.a. Stormy Daniels a.k.a. Peggy Peterson vs. Donald J. Trump a.k.a David Dennison and Essential Consultants, LLC. lawsuit seems to be getting increasingly complex with news of Cohen’s lawsuit against Buzzfeed. It’s also likely that we’re going to see other conversations surrounding Trump and breach of contracts considering the nondisclosure agreements he had White House staffers sign. The agreements supposedly have economic penalties for “unauthorized disclosures” not just during Trump’s term in the White House, but even after he’s out of office.

All of this is to say before you sign a contract, be it for some aspect of nonprofit operations, a personal property transaction, or employment agreement, you’ll need to spend ample time reviewing all the fine print. If at all possible you will also want to run the agreement by a skilled attorney, so they can help catch any obscure legalese or one-sided loopholes.

Questions about “breach of contract?” Need advice on a pending agreement? Want to know if a contract has all the required elements? Don’t hesitate to contact me via email or by phone (515-371-6077).

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Legal Word of the Day (Brought to you by Frances McDormand): Inclusion Rider

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No sooner had I written a blog post on how the Academy Awards relate to estate planning, did one of the award recipients bring up another legal topic that needed to be covered!

Best Actress winner Frances McDormand gave a powerful speech about gender equality in Hollywood. Her words seemed a fitting continuation of the #MeToo movement and Time’s Up initiatives that had a clear presence (both spoken and unspoken) in Los Angelas’ Dolby Theatre. At the conclusion, Ms. McDormand said, “I have two words for you: inclusion rider.”

https://www.facebook.com/ABCNetwork/videos/1880602121983915/

What is a Rider?

You may already know that a “rider” is an addition or extra to the main contract. Riders have special meaning when it comes to the entertainment world.

Perks!

Riders can be used to grant certain perks to an artist (like all of the actors and actresses present at last night’s Academy Awards).

Does a principal dancer want a certain kind of water available backstage? Is the guitarist picky about what foods will be available in the green room before and after a concert? If you’re an entertainer (dancer, comic, actor, musician, speaker, etc.) with a reasonable amount of bargaining power (i.e. star power!), you would want to be sure that your contracts include all your favorite little extras. These extras, or demands, should be placed in writing in each legal contract so that they must be honored by the other party such as a film production company, concert promotor, performance venue, and the like.

guitarist on stage

Finance

Riders can also cover specific financial elements. If a pop star, for example, wants a percentage of a concert’s profits, she might request this through a rider. A television actor could attempt to request something similar from online streaming sales.

Inclusion Rider 

Tack the specific word “inclusion” onto rider and you have a contractual clause that actresses/actors can insist be inserted in contracts that requires cast and crew on a film to meet a certain level of diversity (both racial and gendered).

The concept was explored in a TED talk in 2016 by Stacy Smith. Smith, director of USC Annenberg’s Media, Diversity & Social Change Initiative, believes that inclusion riders (also called an “equity clause”) could be part of the solution for the lack of diversity in films. In a 2014 piece she penned for The Hollywood Reporter, she wrote:

What if A-list actors amended every contract with an equity rider? The clause would state that tertiary speaking characters should match the gender distribution of the setting for the film, as long as it’s sensible for the plot. If notable actors working across 25 top films in 2013 had made this change to their contracts, the proportion of balanced films (about half-female) would have jumped from 16 percent to 41 percent. Imagine the possibilities if a few actors exercised their power contractually on behalf of women and girls. It wouldn’t necessarily mean more lead roles for females, but it would create a diverse onscreen demography reflecting a population comprised of 50 percent women and girls.

Smith asserts that there’s no reason why the majority of the minor roles (on average, 30-ish or so roles) cannot reflect the demographics of the realistic environment where a story is taking place. An A-list actor or actress can use their contract to stipulate that the supporting roles in the film (or show) reflect equitable diversity in terms of both race and gender.

Smith said she’s worked with attorneys in the past to craft specific language for the provisions where if the other party failed to meet the inclusion rider requirements, they would need to pay a penalty to a fund or charitable cause that supports underrepresented persons in the industry.

It’s a smart, common sense move that could mean a big change in countering the bias (both conscious and unconscious) in auditions and casting. The intended result is for greater representation and opportunities for women, persons of color, the LGBT community, and persons with disabilities in entertainment. Plus, as actress and comedian Whitney Cummings said, this increased pressure for inclusivity “will make movies better.”

McDormand on Inclusion Riders

Backstage after the Oscars ceremony, McDormand said of inclusion riders, “I just found out about this last week. There has always been available to all, everybody who does a negotiation on a film, which means you can ask for or demand at least 50 percent diversity in not only the casting and the crew. The fact that I just learned that after 35 years in the film business – we aren’t going back.”

Inclusion Riders & You

While you may not be nominated for an Academy Award anytime soon, the takeaway is twofold.

First: if you support increased representation of different genders and races in movies you can support the films that respect inclusion riders with your money. You can also spread the word with the tag #EquityRider when tweeting to actors and actresses asking for them to support the concept through their own contract.

Second: this goes to show the power of the contact and negotiation process. Because the contract can dictate how the relationship between employer and employee (or production company and talent, for instance) run, it’s important to hire an attorney to help you stand up for your wants and needs in respect to the relationship.

To this point, if you’re a nonprofit organization looking to make some new hires or an employee wondering if the contract you’re about to sign will actually be in your best interest, don’t hesitate to contact me.

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Now Hiring: 4 Reasons Your Nonprofit Needs Job Descriptions

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red for hire sign

It may sound basic, obvious even, but if your nonprofit organization is hiring any employee or independent contractor, you NEED to have job descriptions for each role. And, not just basic job descriptions, but comprehensive overviews of the open position. Be it a position for chief executive officer, marketing manager, or programs director, the advice remains the same.

8 Clauses That Should be in Every Executive’s Employee Agreement

Job descriptions are in part a legal protection, and in part a primary means for announcing the open position to both internal and external stakeholders which is going to help you find or recruit the best candidates for the organization. If that’s not enough to convince you, consider these four major reasons:

  1. Job descriptions can be used as a basis for objective performance management. It provides both management and employees a shared understanding of the duties of the position.
  2. Job descriptions assist in making sure staff duties align with your organization’s overall mission and vision.
  3. When conducting interviews, job descriptions can, and should, inform the development of interview questions.
  4. Job descriptions can be the foundation of a compensation system that accurately reflects employees’ qualifications and responsibilities in the organization.

woman working on computer

I’m here to assist you and your organization on the legal aspects of nonprofit employment ranging from new hires, to employee handbook, to employment contracts. Don’t hesitate to contact me via email or phone (515-371-6077). We’ll schedule your free one-hour consultation and make a plan to set your organization up for success!

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