Tom Stilp JD, MBA/MM, LLM, MSC
We offer three similar cases in which the employer lost each case, although in each case, the courts recognized the employee had been terminated for poor performance.
In the first case, the employer offered a “minimum term of employment for 24 months.” After 14 months, the employer terminated the employee “for cause” based on poor performance in failing to ensure timely shipments, control the plant’s costs, and otherwise attain performance benchmarks. The problem was that poor performance was not a valid basis for termination when (1) performance benchmarks were not set forth in the employment agreement, and (2) the agreement unambiguously guaranteed that a plant manager would receive payment for a specific duration (i.e., 24 months). Eakins v. Hanna Cylinders, LLC, 2015 IL App (2d) 140944, 397 Ill. Dec. 612, 42 N.E.3d 858.
In another case, the employer, Warehouse Direct, stated that: “WAREHOUSE DIRECT WILL GUARANTEE MINIMUM PAY OF $ 5,500/MO YOUR FIRST TWO YEARS.” The employee’s sales performance was poor, and after five (5) months, the Warehouse Direct terminated the employment. Again, the problem was that (1) the agreement did not indicate the employee was required to satisfy any performance requirements, and (2) the agreement unambiguously guaranteed specific compensation of a period of time (i.e., two years). Pokora v. Warehouse Direct, Inc., 322 Ill. App. 3d 870, 256 Ill. Dec. 367, 751 N.E.2d 1204 (2001).
Finally, in the last case, the employer wrote the prospective employee that:
“Per your agreement with Mr. Ron Dierks, you will be joining the Company on 9, May, 1983.
The following terms and conditions have also been agreed upon:
- Guaranteed salary for twelve months of $ 750.00 per week. ($ 39K per annum).
- Guaranteed auto allowance of $ 250.00 per month.
- Usual and customary Company medical benefit program.”
After a few months, the employer told the employee that sales performance was poor and that if sales “didn’t increase, he would have to take some action.” The employee expressed his own dismay about his sales performance and stated that he would endeavor to increase his sales. After a total of five (5) months, the employer terminated employment. Again, the employer lost. The problem was that (1) the agreement did not set any level of performance, and (2) the agreement offered a specific term of employment (i.e., 12 months). Berutti v. Dierks Foods, Inc., 145 Ill. App. 3d 931, 933, 99 Ill. Dec. 775, 776, 496 N.E.2d 350, 351 (1986)
The trio of cases above are just a sampling of many cases where the employer lost despite poor performance of the employee. In each case, a simple drafting error created unnecessary liability for the employer.
Having prepared hundreds of agreements, hiring experienced counsel will know what to do to avoid mishaps.
