I’m still haunted by the call that started my morning early Thursday. A new client needed help with the termination of an executive, immediately. Now, my spidey senses perk up whenever a client calls with a same-day termination, and I generally try to slow down the process to ensure a proper vetting process. So that’s exactly what I did.
After reviewing the offer letter and hopping on a call, I discovered we were dealing with a badly-behaved executive employee who had been hired less than a month prior. The offer letter stated it was “at-will” but provided a three-year guaranteed salary and severance. While the severance was reduced to six months in a termination “for cause,” that remained undefined in the offer letter. Even with a standard definition of “cause,” I wasn’t convinced the facts would support that argument. That wasn’t the only problem with the letter, but certainly the most costly. A sticky, and expensive, situation.
So, dear readers, a few gentle reminders for your offer letters:
- If you are promising severance, clearly condition it on a signed release agreement;
- Define any exceptions “for cause” as well as any notice or cure provisions;
- State any conditions of employment, such as signing the company’s confidentiality and arbitration agreements;
- Confirm work location so you can properly register the employee with the EDD or applicable state agency and advise the employee if onsite work or travel are essential functions of their job;
- State employee’s status as an exempt or non-exempt employee for overtime eligibility purposes;
- Ensure your choice of law is enforceable–this may vary by jurisdiction.
When in doubt, or when working with non-standard provisions, have counsel review the offer. As the saying goes, an ounce of prevention…
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