It’s fairly standard language for a written employment agreement and many other business contracts to provide that the written agreement supersedes any prior oral statements or agreements between the parties.
However, that language doesn’t preclude future modification of the employment contract by verbal agreement of the parties.
For example, there was a recent California case where the employee assumed additional duties and was orally promised additional compensation by her immediate supervisor because of the new responsibilities. The state appellate court found the employee was entitled to the additional compensation because there have been a verbal modification of the employment agreement.
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As an employer, how do you reduce the risk that oral statements made to your employees will modify a written contract?
First, the employment contract should clearly provide that it cannot be modified except in writing signed by the parties.
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Second, limit the number of managerial employees who have the authority (actual or apparent) to change compensation and other key terms of employment. For instance, if it is made clear to the employees that immediate supervisors do not have the authority to give raises, etc., it reduces the likelihood that anything said by this first level of management will be binding when it comes to additional compensation.
Third, train your managers on what can and cannot be said to employees with respect to terms and conditions of employment. If your business is too small to have a dedicated human resources professional, then train your managers to direct compensation inquiries by employees to someone in executive management who is skilled at handling such matters.
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If you haven’t already done so, be sure to have an experienced business attorney review the employment contracts you’re currently using with your personnel. And if you’re not using a written employment agreement, perhaps it’s time to have your business lawyer prepare one that protects your interests so you decrease the odds of getting sued by disgruntled employees or reported to the government for wage and hour labor law violations.
