Resources

The benefit of signed ‘benefits’ agreements

published in McAfee & Taft EmployerLINC | March 29, 2022

Employer-provided “benefits” are varied to say the least. Under Oklahoma law, “benefits” include any “special wages that are paid at certain times under certain conditions, according to the terms of the employment agreement. These include vacation, sick pay, paid holidays, severance, bonuses, and other similar advantages,” other than “mileage reimbursement, travel expenses, ‘sweat equity,’ or stock options.” Okla. Admin. Code 380:30-1-8(d).  

These “benefits” are not required by any applicable federal or state law. As a result, employers have a lot of flexibility and discretion when it comes to determining the type and amount of benefits allowed, including any terms and conditions on eligibility or receipt. 

Offering benefits? Put it in writing and get a signed acknowledgment.

When determining whether an individual is entitled to “benefits,” the Oklahoma Department of Labor (ODOL) will look to the employer’s policies or practices. “Entitlement to benefits and/or the receipt thereof may be found upon proof of an established policy, or pursuant to the terms of a written agreement, and may be conditioned upon a certain level of job performance or any other criteria not otherwise unlawful.” Okla. Admin. Code 380:30-1-8(d).   

For example, paid time off (PTO) policies may incorporate any of the following:

  • Forfeiture of any accrued and used paid time off at the end of the year (“use-it-or-lose-it” policies)
  • A cap on the amount of accrued paid time off employees may roll over to a following year
  • No payment of accrued but unused paid time off at termination
  • Payment of accrued but unused paid time off at termination 
  • A cap or limit on the amounts of accrued but unused paid time off paid out at termination (i.e., up to 40 hours)
  • Conditioning the payment of accrued but unused paid time off at termination (i.e., pay only if the employee is laid off as part of a reduction in force, or the employment terminates without cause, or the employee provides sufficiently advance notice of resignation, etc.) 

As another example, when it comes to bonuses, employers may lawfully:

  • Condition receipt on the achievement of specific criteria (i.e., performance, production, attendance, etc.)
  • Require employees to be in good standing throughout the bonus period and/or at the time of bonus payment
  • Require employees to be actively employed at the time of bonus payment

Employers must specifically identify any and all qualifying and limiting terms and conditions, and should do this in writing – whether in an employee handbook or an individualized employment contract. 

But does this writing have to be signed by employees?  Here in Oklahoma, yes.

“Any restrictions, criteria or conditions on benefits, including employer discretion and any limits thereon, must be contained in a written policy signed by the employee or they will not be held valid. The employer will be held to the terms of the benefit arrangement, and once the employee meets the criteria set forth therein, the benefit becomes part of wages earned and due and is thereupon payable as provided by statute in 40 O.S. § 165.1 et seq.” Okla. Admin. Code 380:30-1-8(e).  

The ODOL regularly relies on this provision to invalidate employer limitations or restrictions on employment benefits that are not contained in a writing signed by the employee. 

This begs the question: are electronic signatures acceptableYes, if certain procedures are followed.

While it does not appear the ODOL has weighed in on the topic specifically, Oklahoma has adopted the Electronic Signatures in Global and National Commerce Act, or the E-Sign Act, which supplements the Oklahoma Uniform Electronic Transactions Act (UETA). Read together, these laws stand for the proposition that a “signature may not be denied legal effect or enforceability solely because an electronic record was used in its formation.” “If a law requires a record to be in writing, an electronic record satisfies the law.” Further, “[i]f a law requires a signature, an electronic signature satisfies the law.” Employers across the nation rely on these laws to utilize digital signatures on human resources documentation, such as handbooks, agreements and policies.  

Under these laws, an “electronic signature” must be shown to be “the act of person.” This can be shown in a variety of ways. One of the most common is through use of security protocols that demonstrate that only the employee could have electronically signed an acknowledgment. For instance, employees may be assigned unique identification numbers, which can then be used in connection with passwords of the employees’ choosing to access and electronically sign policies. Employees must be given the option to opt out of electronic signatures in lieu of receiving and signing paper documents. Employees should be required to take affirmative steps – such as clicking “I Accept” or checking a box indicating acceptance – prior to affixing an electronic signature. Employers must retain copies of the electronic signatures.

Whatever method you use – good, old-fashioned paper and pens or digital signatures – be sure to put all benefits terms and conditions in writing, and have them signed by your employees. Otherwise you may end up owing benefits to employees who should have been disqualified from receiving them.