 |
||||
 |
 Stephen
O'Connor, SPHR, is senior director of Professional Search Services
for the MHA Service Corporation, Lansing, and can be e-mailed at
soconnor@mha.org |
Staff
Matters Newsletter
September/October 1999 |
|
The 1990s have been replete with merger mania, acquiescence to acquisitions and a general affection for affiliations. The health care industry has been no exception. It seems to have taken its cue from the private sector. Mergers in the private sector of the market happen frequently, and frequently they’re funny. First Draft Publications in Chicago recently published a list of unthinkable mergers. There has long been a rumor that W.R. Grace Co. was going to buy Fuller Brush Co. and Mary Kay Cosmetics and then merge with Hale Business systems. This would result in the new mega-corporate entity known as "Hale Mary Fuller Grace." Don’t forget the failed Yahoo/Netscape merger: "Net’n’yahoo." Then there’s the Honeywell & Imasco & Home Oil marriage, "Honey, I’m Home." And who could forget the potential coming-together of Zippo Manufacturing, Audi, Dofasco and Dakota Mining: "Zip Audi Do Da." As the uncertainty about job security caused by these mergers rises and the seller’s market in labor continues, employment contracts as a safety net for management personnel become more attractive. These employment contracts are much like prenuptial agreements. You hope you don’t ever have to use them, but they make the parties involved feel better. In the Spring 1998 issue of the Society of Human Resources Management’s Legal Report, Louis K. Obdyke, Esq., SPHR, outlines the "when, why and how of written employment contracts." He says most employers desire the flexibility to hire and fire at will but face restrictions on the application of the employment-at-will doctrine. Those restrictions include union agreements limiting discharge to for-cause reasons; public policy exceptions like the whistle-blower act; covenants of good faith and fair dealings; and courts findings that employee handbooks, working conditions or employer statements create an implied contract of employment. There are some very solid reasons for using an employment contract in those situations that warrant it (see sidebar). Generally, the courts have held that employers and employees are free to agree on the terms of an employment contract. However, employers must have a working knowledge of the federal and state laws governing the employment relationship. Any employment contract is still subject to the provisions of Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Immigration Control and Reform Act, and any relevant state law that affects employment contracts. The contract length, confidentiality provisions, compensation, specific job duties, noncompete provisions and conditions of termination should all be articulated with the help of an attorney. As future mergers happen in the Michigan health care industry, the resulting possibilities are intriguing. If Helen Newberry Joy Hospital merged with William Beaumont-Troy, they’d become "Helen of Troy." If St. John Health System acquired Carson City Hospital they’d be "Johnny Carson." And how about the hospital in Big Rapids affiliating with W.A. Foote Hospital?" Wouldn’t they be called "Big Foote?" The one I really worry about, however, is if Eaton Rapids Community Hospital merged with Cottage Hospital and then they both were acquired by the Stratton-Cheeseman Management Company here in Lansing. I’m afraid they’d become (I’m really sorry about this one) "Eaton Cottage Cheese." Sidebar: Situations that warrant using an employment contract:
|