LITIGATION AND LEGISLATION
Handbooks or handcuffs?
Laurance Jerrold
Woodbury, NY
D
o you use employee handbooks? Do you consider
them to be contractual in nature? Can you be
sued if you don’t follow the policies and proced-
ures relating to paying an employee for unused vacation
time accrued, as specified in the handbook? Nieto v
Clark’s Market, Inc, Colorado Supreme Court 2021 CO
48, No. 19SC553, June 14, 2021, addresses this issue.
Okay, you are one of those employers who use an
employee handbook. You know, that document that de-
scribes, among other things, how vacation time is
accrued, how and when it can be used, and whether
and under what circumstances an employee is entitled
to be paid for unused accrued vacation time when
they are no longer are employed by you, and so on.
Similar to the case cited above, let’s say that your hand-
book specifies that on separation, the employee is enti-
tled to be paid for the unused accrued vacation time only
if she voluntarily resigns (is not fired for cause) and if she
provides you with at least 2 weeks’ notice; otherwise, the
employee forfeits these benefits. Well, whatever the
reason was, and let’s assume it was a good one, you
fire the employee. She now requests to be paid for the
unused accrued vacation wages earned, and you refuse
to pay her because she did not follow the terms specified
in the handbook.
She sues you, claiming that your policy violated sec-
tions 8-4-101(14)(a)(III) and 8-4-121, C.R.C 2018 of the
Colorado Wage Claim Act (CWCA) as your actions
deprived her of earned wages. The trial court dismissed
the claim in your favor finding that the Act gives em-
ployers the right to enter into agreements concerning
vacation pay policies outside of the CWCA so long as
they don’t contravene the intent of the statute. Natu-
rally, the ex-employee appealed the decision. The Appel-
late Court also decides in your favor. The Plaintiff
appeals once again. However, the Supreme Court re-
verses the decision; you need to pay up, and here’s why.
At the Appellate level, the court first turned to the
CWCA itself. Section 8-4-109(1)(a) states: “.when
an employer discharges an employee, the wages or
Associate Editor for Litigation and Legislation, Private practice, Woodbury, NY.
Am J Orthod Dentofacial Orthop 2022;162:279-81
0889-5406/$36.00
Ó 2022 by the American Association of Orthodontists. All rights reserved.
https://doi.org/10.1016/j.ajodo.2022.05.003
compensation for labor or service earned, vested, deter-
minable, and unpaid at the time of such discharge is due
and payable immediately.” The court then went on to
section 8-4-101(14)(a)(III) and looked at the definition
of vacation compensation. The CWCA defines that
term to mean
Vacation pay earned in accordance with the terms of
any agreement. If an employer provides paid vacation
for an employee, the employer shall pay upon separa-
tion from employment all vacation pay earned and
determinable in accordance with the terms of any
agreement between the employer and the employee.
The court was quick to note that no amount can be
considered wages or compensation of any type until
such amount is “.earned, vested, and determinable.”
The court, in its ruling, stated plainly that insofar as
the Plaintiff’s claim is concerned
.the employee’s substantive right to compensation
and the conditions that must be satisfied to earn
such compensation remain matters of negotiation
and bargaining, and are determined by the parties’
employment agreement, rather than by the statute-
.including vacation pay in the definition of wages
or compensation if .earned and determinable in
accordance with the terms of any agreement between
the employer and the employee.
Opining that the ultimate resolution depended on
finding that the vacation wages in question had been
“earned, vested and determinable,” the court turned to
the language in the handbook, noting that the Plaintiff
was not entitled to the accrued vacation pay as the
amount had not vested under the terms of the handbook
because the Plaintiff was terminated as opposed to her
having resigned and providing the required notice.
Although all of this seemed reasonable, the Supreme
Court took a very different position holding that
although no employer is required to provide an employee
vacation pay, once the employer provides such compen-
sation, it is protected to the same degree as other earned
compensation; and once earned, cannot be forfeited by
an agreement that is contrary to the CWCA. In other
words, the court stated that “.an employee who has
performed services required in an employment contract
has a vested right to the compensation earned” . and
279
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in addition, “Vacation pay—like wages—is both vested
and determinable as of the date of termination.”
(emphasis in original text)
Addressing the Defendant’s argument that the
parties had a right to agree to the forfeiture clause if
certain terms were not met (not being fired and
providing sufficient notice), the court noted that the
CWCA was designed to protect workers from agreements
that essentially would allow an employer to circumvent
the intent of the statute which was to prevent employers
from engaging in specific acts of “exploitation, fraud,
and oppression,” to the detriment of the employee.
The court, determining that this is precisely what
occurred, remanded the case back to the lower court
for action consistent with its decision.
COMMENTARY
Before starting with my commentary, I need to make
it crystal clear that my comments and opinions are just
that—mine. They in no way represent the belief or posi-
tion of the American Association of Orthodontists or the
American Journal of Orthodontics and Dentofacial Or-
thopedics. Okay, guys, you’re off the hook.
Many practice management gurus favor using
employee handbooks. There are numerous reasons sup-
porting this position. A nonexclusive list of some of the
more common reasons cited are (1) to inform employees
about your practice’s history, culture, and mission state-
ment; (2) to help define each employee’s job duties and
responsibilities; (3) to express your expectations as they
relate to the employee’s interactions with fellow em-
ployees and patients; (4) to inform employees of how
often job performance appraisals will be performed
and the policies and procedures for failing to meet ex-
pectations including remediation protocol; (5) to outline
compensation policies, bonus structures, and termina-
tion or separation concerns; (6) to clearly define your
legal obligations to them as their employer particularly
relating to antidiscrimination policies and workplace
safety initiatives; and (7) to address dress code, social
media, and drug testing policies.
Employee handbooks also provide the impression that
you won’t be subjective in your dealings with your em-
ployees; you will be even-handed in the employer-
employee relationship as per the stipulations noted in
the handbook. Handbooks provide a sense of stability
and security, and they have been cited as one method
of attracting a higher caliber of employees. Because of
how they are often worded and used, they have also
been interpreted as being contractual in nature.
In most states, the employment relationship is “at-
will.” This means that unless there is a contrary, written
agreement, the employer is free to fire an employee for
August 2022  Vol 162  Issue 2 American Journal of Orthodontics and Dentofacial Orthopedics
Litigation and legislation
any reason or no reason. Conversely, the employee is
free to leave your employment for any reason or no
reason. But, the question then becomes, does this recip-
rocal “at-will” posture still exist in the face of any spe-
cific verbiage to the contrary that may be found in an
employee handbook signed by both parties? Are you
willing to give up this freedom to staff your office as
you see fit as long as any termination decisions are not
based on illegally defined criteria such as race, religion,
sexual orientation, and so on?
I get it; I really do. I understand today’s workplace
environment and how hard it is to attract, hire, and
keep good employees. A well-structured employee
handbook can probably be very positive in that regard.
However, I have seen first-hand, more times than I
care to count, how hard it can be to get rid of a bad or
marginal employee because of a workplace handbook.
I know, all you have to do is follow the steps specified
in the handbook and document up the wazoo anything
and everything that your “soon to be gone” employee
has done that drove you to the point of needing to
terminate her employment. This documentation process
is often administratively burdensome, can include mul-
tiple attempts, often futile at remediating certain nega-
tive behavior, and most importantly, at least for me, the
process takes time.
The way I see it is that if this is my office, why should I
have to work so hard to change the environment? If I
decide somebody is toast, I want to be able to do some-
thing about it immediately. Toxic environments only get
worse if they are not changed tout de suite. In the worst-
case scenario, keeping a bad employee on the payroll
while you do whatever you have to do according to
the handbook to remediate and reverse the situation
may subject you to claims from your other employees
that your inaction is contributing to a hostile work envi-
ronment.
Employee handbooks work best in a large environ-
ment with many employees, but they often fall short
with applicability to small “mom and pop” type opera-
tions in which there are few employees who need to
work closely together as a cohesive team. In a small or-
thodontic practice, in which many of us find ourselves, 1
bad actor can surely (don’t call me Shirley) upset the
practice environment for you, your other team members,
and, just as importantly, your patient base.
As I travel around the country, at least when I did pre-
coronavirus disease, and as I converse with colleagues
from all over, I hear the same thing. It goes something
along the line of “I can handle the orthodontics; it’s
the administrative stuff that’s the killer,” and employee
human resources stuff is often number one on the hit
parade.
Litigation and legislation
In the movie The Ten Commandments, Yul Brenner, in
the role of Pharaoh, said regarding striking Moses’ name
from every obelisk and piece of papyrus, “So let it be writ-
ten; so let it be done?” That edict may work great, but it
takes time for the stonecutters and scribes to do their
jobs. However, for my 4 or 5 chair office and me, maybe
I have a satellite site and a total staff of 10 or so, that
doesn’t work for me. Nope, I’m a true Libertarian. As
American Journal of Orthodontics and Dentofacial Orthopedics
281
Patrick Henry stated during the Second Virginia Conven-
tion, “Give me liberty or give me death”; I need the
freedom to hire and fire as I need to when I need to,
without being bound by the terms in a handbook.
Handbooks are probably a good idea in the large
corporate environment, but in a more traditional prac-
tice setting, the best use for a handbook may be to
prop up a wobbly table leg.
August 2022  Vol 162  Issue 2