On November 24, 2020, the Michigan Court of Appeals issued an opinion in Sikkema v. Professional Benefits Service, Inc., which highlights why it is so critical to (a) have an employment law attorney review any offer letter, employment agreement, or compensation plan before you sign on the dotted line; and (b) consult with an employment letter before you terminate your employment. In Sikkema, the employee signed an employment agreement that provided for severance payment only up on the satisfaction of three conditions. If all three “conditions precedent” were satisfied, prior to submitting a resignation notice, the employee stood to gain $137,300 in severance payments. However, after the employee was notified that she would be involuntarily separated from the company, the employee learned she would be intentionally separated in a manner necessary to invalidate the $137,300 she could have received in compensation.
Plaintiff would only have received the severance pay had she (1) been terminated without cause on or before December 31, 2018, (2) resigned from employment; and (3) signed a release for the employer. Ultimately these conditions were so employer friendly that there would have been myriad ways for the employer to avoid triggering the severance payout. Viewing this contractual language in a vacuum, it appears that the employer never intended to make a severance payment. The employee was likely enticed by the language awarding her a healthy sum of money, but not skeptical enough of the language drafted by the employer. However, because the “conditions for the severance payment had been agreed upon by the parties and put into the employment contract,” a court of law will always follow the express language of the agreement.
In my practice of law, I have seen this situation play out many times. Employees feel like they lack bargaining power and agree to one-sided language at the outset of employment, only to deeply regret the decision later on. Most employees believe that the company will fairly reward them for their hard work and give them the benefit of the doubt when it comes to any benefits of employments. Instead, employees find themselves being denied compensation and benefits that they felt entitled to.
If you would like an employment law attorney to review your contract or help you strategize on how to separate from your employer, please contact attorney Noah Hurwitz.
The opinion referenced in this article can be found at http://www.michbar.org/file/opinions/appeals/2020/112420/74338.pdf.