Negotiating Employment Agreements

1. Negotiating Employment Agreements By Neil Klingshirn

2. Employment Agreements • Compensation and benefits. • Duration. • Duties. • Arbitration. • Non-compete and NDA. • Severance.

3. Non-competition Agreements • Non-competition. • Non-solicitation. • Non-interference. • Geographic scope. • Duration • Enforcement

4. Severance Agreements • Severance amount. • Unemployment compensation. • Release of Rights • Tax treatment of the severance payment. • Lump sum vs. salary continuation. • Benefits continuation, especially health insurance;

5. Severance Agreements (cont.) • 401K Rollover. • Outplacement services. • Retraining opportunities. • Eligibility for rehire.

6. Severance agreements (cont.) • Use of office and support staff. • References and non-disparagement. • Confidentiality. • Enforcement.

7. Negotiating Favorable Terms • Know the law. • Create leverage. • Identify goals.

8. Employment Law Overview • Contracts • Statutes • Common law

9. Contracts • Wages for work. • Employment at-will, unless otherwise agreed. • Other mutually acceptable terms. • Remedies for breach.

10. Statutory Rights • Discrimination. • Retaliation. • Trade Secrets. • Wages and Hours. • Benefits and Leaves. • Safety and workers’ compensation. • Civil service.

11. Common Law Employment Rights • Implied contracts. • Public policy protections. • Minority shareholder/employees. • Duty of Loyalty. • Privacy.

12. Employment & Non-compete Leverage • Your value. • Competition for your services. • Competition for your job.

13. Employment & Non-compete Goals • Maximize: • Compensation and benefits. • Duration. • Severance. • Minimize: • Restrictions. • Avoid: • Arbitration. • Non-competes and NDAs

14. Employment Agreement Negotiation • Obtain and evaluate the offer. • Craft a counter. • Be realistic. • Leave room to move. • Justify your position. • Take the employer’s perspective. • Back it up with objective data. • Blame it on a higher power (e.g., the spouse).

15. Compensation, Duration & Severance • Compensation is market driven, but: • Define bonus, commission terms; • Vacation, sick time is negotiable; • Consider stock options; • Avoid equity as compensation. • Duration is usually at-will, but try: • One year, with automatic renewal (evergreen); • Notice for terminations without cause; • Severance is ticklish, but try: • Uncertainty of the position; • Trading off for duration, non-competition;

16. Non-competition • Just Say No. • Limit restrictions to: • Your own customers; • One year or less; • Those imposed by Trade Secrets laws. • Trade for: • severance, • compensation.

17. Arbitration • Just Say No. • Limit to violations of the Agreement • Carve out statutory rights; • Reject limitations on rights and remedies; • Shift costs to the employer.

18. Severance • Severance plans. • Know your rights. • Violations = claims. • Know the value of your claims.

19. Severance (cont.) • Obtain and evaluate an offer. • Craft a counter. • Be realistic. • Leave room to move. • Justify your position. • Take the employer’s perspective. • Back it up with evidence. • Be patient.

20. Special Severance Issues • Unemployment compensation. • Agreement not to contest. • Pay severance as lump sum. • Health insurance • COBRA. • Stimulus subsidy. • Eligibility for Re-hire.

21. Carve Outs from the Release • EEOC’s right to investigate; • Right to apply for unemployment; • Wage and Hour claims; • Pension, 401(k); • Claims arising after the agreement.

22. Get it in Writing • Review with an attorney. • Waiting periods. • Beware of the boilerplate.

23. The End “The Best Time to Understand an Agreement is Before you Sign it.”