Promising a Raise May Raise Legal Questions

If you're thinking about promising raises to a few of your favorite employees, but you're not totally sure that you can actually deliver on them, get ready to face potential legal liability.

Employers should be careful about making promises of a raise because that promise may ultimately be an enforceable term of the employment contract.

"Promising" Legal Issues

All kinds of statements you and supervisors make, orally and in writing, can be considered contractual statements. It could be a promise of a raise mentioned in a hallway conversation, a statement in an employee handbook, or even a line on an employee's application form.

Employers should be extra cautious about making "promises" through:

• Actions and actual practices. Beware how you and your employee have actually behaved regarding the raise issue. Also, recognize how you have treated other employees and previous employees in similar circumstances with regard to raises. These are ways to form an implied contract.
• Verbal statements. Even in a casual conversation, making promises about a raise can turn into a contractual nightmare for an employer. Even generally unenforceable oral contracts can be enforced when a person complies with the terms and detrimentally relies on that promise.
• Written statements. In general, anything in writing that describes any terms, benefits or conditions of employment can come back to haunt you -- promises about raises are no exception. This includes notes in an employee's personnel file, memos posted on the bulletin board, ambiguous language in an employee handbook, and letters to the employee.

Steps To Take

Above all, train officers, supervisors, and managers on proper communication. Make it clear to them that making promises -- explicit or implied -- to an employee without proper approval could expose the company to liability for potential breach of contract.

For extra guidance on the do's and don'ts of making promises, consult an experienced employment lawyer.

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Related Resources:

• 5 Clauses Every Employment Contract Should Include (FindLaw's Free Enterprise)
• 3 Things to Know About Employee Contracts (FindLaw's Free Enterprise)
• 7 Business Deals That Require a Written Contract (FindLaw's Free Enterprise)
• These Business Policies Must be in Writing (FindLaw's Free Enterprise)