Executive Severance Agreement & Legal Representation
Prudent executives should utilize the services of an employment lawyer when they are initially hired and offered an executive compensation agreement, but they seldom do. Making sure an executive compensation agreement is properly drafted in favor of the executive employee, from the get-go, is of paramount importance. Otherwise, the executive risks not being properly paid, being fired without notice, having an illusory employment contract, or ending up in litigation. Lesson: Executives should hire their own employment lawyer to protect their rights during the drafting process of their executive compensation agreements.
The Employment Lawyers Group is a litigation firm so we often appear on the scene once the executive is being terminated, has been fired, the executive realizes they will never be properly paid under their executive compensation agreement, money is due under the agreement, or there is clearly the need to sue the employer. Sometimes we are asked to assist in severance negotiations when a high level employee is being fired. Our ability to achieve large severances for employees, however, usually depends on whether their employment contract is any good or whether they have an underlying case for a form of wrongful termination. Our experiences representing employees and executives have caused our employment lawyers to itemize the following key points about executive compensation agreements.
Common problems employees with employment contracts face because of improperly drafted employment agreements, often by the employers’ lawyers, whom fail to take into consideration the employees’ interests:
- The employment contract lacks a term. A term means the specified length or duration of the contract. An employment contract without a term may not even be enforceable as a contract in court.
- The duration (length or term) of the employment contract is too short to be meaningful
- The duration of the employment contract is over, but the employee remained employed
- Provisions of the employment contract allow the employer many outs from the employment relationship
- The employee has signed employment documents other than the so-called contract, and the other documents contain at-will language claiming the employer can end the employee’s employment for any reason at any time. The signed employment documents might be an acknowledgement of an employee handbook, employee arbitration agreement, or an employment application
- The employment contract itself claims the employee is at-will
- The employee was given an offer letter that is signed by somebody of authority, but it states the employment is subject to the will of the employer, or that it is not a contract
- The employee handbook or a document the employee is asked to sign contains a statement that nobody other than the President of the Company, CEO, or like high ranking officers of the employer are able to making a legally binding contract on the employer
- The employee never obtains the employer’s signed version of the employment contract
- There is confusion and dispute about which version of an employment agreement, or attachments control, or were signed by both the employee and employer
- The employment agreement contains liquidated damages in the event of a breach of contract, and the liquidated damages are limited such as 30-90 days of pay
- The employment agreement allows the employer to terminate the employee if they provide the employee limited notice such as 14-60 days, and if notice is not provided the employee’s remedy is the amount of pay they would earn during the notice period
- Damages under the employment contract are to be calculated on the basis of straight salary which does not consider 401k marching by the employer, bonuses, commissions, stock options, or any other valuable employment benefits including health or life insurance
- Salaries have changed since the time the employment agreement was signed, but new employment agreements specifying the new salaries were never made. This causes trouble if the employment agreement specifies severance is based upon the salary stated in the written employment contract. The same issue exists if commission formulas orally change, or even in writing, but the original employment contract purports to claim it is the only contract governing compensation.
- New signed contracts claiming they are the only signed contracts may cast shadows of doubt whether the original employment contract is still valid
- The manner of determining commissions or bonus is unclear due to vagueness in the contract
- The employment contract is only a small portion of the employment agreement because there are riders, addendums, or attachments that can be found who knows where and say who knows what
- The employer is intent on enforcing non-compete agreements
- All of the employee’s knowledge constitutes a trade secret of the employer, at least according to the employer
- The name of the employer on the original employment contract is not the name of the present employer
- The employer claims they had cause to fire the employee
As illustrated above there are many contract terms employers can insert in employment agreements that are unfavorable to the employee, and favorable to the employer. Firm Head, Karl Gerber, has successfully obtained monetary recoveries for clients in which one or more of the above contract problems existed. It is up to a skilled employment lawyer to argue these sorts of issues with employment contracts do not end the day in court.
Terms can also be confusing and create contractual ambiguities. Too often employee think they have a great employment contract which upon inspection by a contracts lawyer ends up being a contract that provides little benefit to the employee. We can help in situations requiring litigation in arbitration or court. We might also be able to help you properly draft and obtain the terms of employment that will help you, in your employment contract.
Our experienced employment lawyers can assist if:
- An employment contract has been breached and there needs to be litigation
- An employment agreement is terminated by the employer before its expiration
- If the employee is fired for unlawful reasons such as wrongful termination or a form of discrimination (age, disability, medical condition, or race), or the employment termination is motivated by the employer’s desire not to pay the employee compensation under the employment contract
- The employer is refusing to pay a bonus, commissions, or stock options which comes up somewhat frequently in the world of employment litigation
- There is a dispute about what percent, or override commissions are figured at
- There is a dispute about what the employer’s gross profits or net profits are for the purpose of determining how much money is owed to the employee
- The employer has never properly shared information about profits so the employee can determine what commissions they are owed
- The employer is refusing to provide complete information about the amounts collected in revenues for the purpose of determining the amount of bonus or commissions
Firm Head, Karl Gerber, has practiced employment law since 1993. He has represented many executives including officers of corporations, site managers, human resources, legal counsel, partners, minority shareholders, doctors, professors, high ranking managers, and high ranking sales people. He has more than enough experience to properly represent high level employees. In binding arbitrations and trials he first-chaired his win rate is 45/46. He has also won a number of appeals (some published), and written more than 300 articles on employment law. He is the kind of top employment lawyer a high level employee needs if they are engaged in a contract dispute, or litigation.
Examples of Karl Gerber’s contract and executive cases:
- $1,150,000 settlement due to unpaid commissions under a written commission agreement in which the employer fought about which agreement was valid
- Damage recovery of almost all of the damages due a San Fernando Valley Vice-President in a contract dispute in which the employer claimed they never signed the contract
- $150,342 settlement in 2014 dollars in a breach of implied contract case for an Altadena manager
- $182,085 settlement in 2014 dollars when an Orange County CFO was fired when he took a medical leave
- $175,000 for a Marina Del Rey controller wrongfully terminated for financial whistleblowing
Our firm maintains offices in Sherman Oaks in the same building we bought back in 1999. We also maintain a downtown Los Angeles office. In 2013 we acquired an on-the-water property in Mandalay Bay, Oxnard to serve Ventura County and north. We also have offices in Tustin, Bakersfield, Riverside, San Diego, San Francisco, San Jose, and Sacramento. For an employment lawyer capable or representing high level employees and executives call 1-877-525-0700. Lots of expensive legal representation all on a contingency.