Employment agreements – what to do before you do

August 20th, 2018 by Judy Yi at Polsinelli


This blog was written by Judy Yi at Polsinelli. Polsinelli authors hrsimple resources in Missouri, Kansas and Illinois. You can find the original blog post and their labor and employment blog Polsinelli at Work (which is excellent) on their website.

 

Five Issues When An Employer Is Considering An Employment Agreement

When operating its business, an employer should consider whether and when to implement employment agreements with certain employees.  When considering whether an employee should execute an employment agreement, employers should consider the following five factors: 

1.       Complex or specialized compensation, bonus, equity rights, fringe benefits, or duties: If the employee receives compensation, bonuses, equity rights, or unique fringe benefits that other employees do not receive, employers should strongly consider memorializing same in an employment agreement.

2.       Restrictive covenants: Some states’ laws require restrictive covenants (non-competition, non-solicitation and/or confidentiality) provisions to be a part of an otherwise enforceable agreement and do not permit stand-alone restrictive covenant agreements.  In such cases, to the extent the employer wants the employee to agree to restrictive covenants, the covenants should be included in an employment agreement. 

3.       Employment for a definite term (with severance): When recruiting employees who would be difficult to replace or who hold a significant position with the company, such as a C-suite employee, the employer may wish to negotiate employment for a specified period to time.  The employer should also consider memorializing with the employee whether and when severance payments will be due to the employee upon termination of employment.        

4.       Change in control: Typically, for C-suite or key employees where the employer needs to have certain provisions become operative in the case of a change in control (sale of assets, sale of stock, merger, etc.), placing such terms in an employment agreement is advisable. The employer may also consider including an assignment provision – as permitted under applicable state law – to assign the employment agreement to an entity that buys the employer’s business.     

5.       Memorialize specific post-termination provisions: The employer should memorialize any post-termination obligations in an employment contract, and should also consider whether to include a compulsory mediation or arbitration provision regarding any disputes surrounding any post-termination disputes that may arise. 

When properly implemented, employment agreements can be very beneficial to employers.  Employers considering asking employees to sign such agreements would do well to consult with competent counsel. 

Judy Yi at Polsinelli





Can't find what you're looking for?

Sign up for free to gain access to our complete HR Library


Free Webinar
Handling Real World Problems

September 19th, 2019 at 12:00pm CDT

SHRM & HRCI certified

Related posts

Employee benefits law

This guide is intended to provide a general overview of the principal laws that apply when an employer chooses to provide benefits for its employees. The purpose of the guide is to help employers communicate with their advisors more effectively about employee benefits and benefit programs. Emp...

SC Not really married, not really benefits, not really leave

You May No Longer Be Married in South Carolina The Supreme Court of South Carolina recently issued an Opinion prospectively abolishing Common Law Marriage in South Carolina.  Stone v. Thompson, Op. No. 27908 (S.C. Sup. Ct. filed July 24, 2019) (Shearouse Adv. Sh. No. 30 at 94).  The effective ...

SC Common law marriage is no more – this affects the workplace how?

South Carolina Abolishes Common Law Marriage:  The Impact on Workplace Law The South Carolina Supreme Court just ruled that the state will no longer recognize common-law marriages. This decision will have a direct impact on South Carolina workplace law, requiring many employers to adjust their...

401(k) plan + payroll provider = 401k good things

This blog is courtesy of Jennifer Ready at HK Finanical Services and the Iowa Association of Business and Industry (ABI) and can be found on the ABI website.   Top Reasons to Integrate Your 401(k) Plan with Your Payroll Provider Jennifer Ready Combining your 401(k) plan administration...

Open enrollment – personalizing perks pays off

SHRMS's third in a series of articles on meeting fall 2018 open-enrollment challenges deals with providing employees with the opportunity to tailor benefits to meet their needs. How can customized benefits increase loyalty? Would employees pay for them on their own? Would they take a pay cut f...

Help hiring holiday help here

This blog was written by John Monroe and Kristina Griffin at FordHarrison, which authors our "Hiring, Firing and Discipline for Employers" and "An Employer's Guide to FMLA and ADA". You can find the original blog post and their Legal Alerts on their website.   Welcome to the Holiday Season!...

I've changed my name – to Optimus Prime

So say an employee, let's call him, for purposes of this exercise, Scott Edward Nall, walks into your office to let you know he has changed his name to Optimus Prime.  Do you: snicker and ask him if his Laser Axe Hand is really made of energy wonder why he isn't riding a dinosaur fall t...

Four-legged office mates and the pawternity policies they benefit

This blog was written by Danielle Krauthamer at Fisher Phillips, which authors several of our resources. You can find the original post and the On the Front Lines newsletter on their website.   Pawternity Leave: Are Employers Barking Up the Wrong Tree With Pet-Based Leave? We’ve all hear...

Milk Stork delivers for working mom's and their baby

If you are in the practice of sending employees on overnight business trips AND you employ new mothers AND you believe in treating your employees right we’ve got just the bird for you.  Milk Stork is the first breast milk shipping company to support nursing mothers who are on the road and need...

PTO on the house!

Traditionally, most companies have offered a paid leave package to employees that differentiates between vacation, personal and sick days. However, combining all categories into a single paid time off (PTO) bank is a growing trend. A PTO model increases employee flexibility and has the potential ...

How to treat fringe benefits for employees

This chapter provides an overview of some fringe benefits that are not among the benefits that can trigger coverage under the Employee Retirement Income Security Act (ERISA) and are not discussed elsewhere in this book. Generally, a fringe benefit is a form of non-cash compensation paid to an emp...

Service dogs at work

(Customer) service dogs at work can work. Our authors @Littler help show how here

Hiring, firing and discipline - a simple audit

The following list of questions should serve as an introduction to a number of fundamental employment law concepts, and the answers to each question will enable users to determine if “best practices” generally are being followed. Of course, this list of questions will not ensure that full complia...

Dumb questions and other interviewing do's and don'ts

VIDEO The Do's and Don'ts of Interviewing Applicants What questions are considered illegal to ask during the interview process? Bethany Salvatore and Bryant Andrews discuss interview do’s and don’ts as well as best practices. This video features Bethany Salvatore and Bryant Andrews at Co...

How to Ghostbuster a new hire or applicant

Top 10 Ways Employers Can Avoid Getting Ghosted This Halloween…And Beyond As if things aren’t spooky enough this time of year, employers have a new concern: getting “ghosted” by an applicant, a new hire, or even an existing employee. But this modern phenomenon isn’t just something to worry abo...

Bad hire! Bad, bad hire!

Just like a dog, a hire can be bad for a multitude of reasons, including the hirer (trainer), the hired (dog), everyone's expectations (in both cases some praise and/or a treat), and the environment (workplace/home). HR Dive is here to help (with the bad hire*): "Sooner or later, even the m...

Mr. Freeze unveils National Security Freeze tagline: "They can't steal your identity if it's frozen"

This blog was written by Fisher Phillips, which authors several of our resources. You can find the original article and their Legal Alerts on their website.   The Freeze Is On: Employers Must Immediately Update Background Check Forms   There is a little-known provision from a new federal...

Background checks of the future are continuous

This blog was written by Spencer Waldron at Fisher Phillips, which authors several of our resources. You can find the original post and the Employment Privacy Blog (which is excellent) on their website.   How Much Do You Really Want to Know About Your Employees? The Growing Popularity of Co...

Who are you? Why are you here? Personality testing?

This blog was written by Matt Anderson at Troutman Sanders, author of the Georgia Human Resources Manual. You can find the original article and their HR Law Matters blog on their website.   Who Are You?: The Legal Implications of Employee Personality Testing Many employers require emplo...

Technology driving the hiring process

Interviewer: So where do you see yourself in five years? Applicant: I'd say my biggest weakness is listening. Maybe the questions you ask haven't changed (and maybe not the answers you get either), but the process of hiring – ZipRecruiter, downloads, videos, Indeed, resume filters – has. ...

Dr. Strangelabor or: How I Learned to Stop Worrying and Love the Millennial

This blog was written by Patricia Dammann, VP Programs & Operations/OD Strategist at Institute of Organization Development. You can find the original article here. Attracting and retaining millennials using a strategic talent management approach It all started with a simple question...

Did Bartleby the scrivener write his own job description?

Well, maybe he didn't necessarily write the job description, more like he personalized it. And a personalized job description should make for a more engaged employee, n'est-ce pas? Vivek Patel from SAP shares in the Harvard Business Review something that all of us know, whether HR specialis...

Hiring under the age of 18

This blog was written by Natasha Sarah-Lorraine Banks at Fisher Phillips, which authors several of our resources. You can find the original here and their Wage and Hour Laws Blog here.   Hiring Minors in the Heat of the Summer: What Employers Need to Know Summertime is quickly approachin...

Looking for employees: an untapped source of talent

This blog is courtesy of the Iowa Association of Business and Industry (ABI) and can be found on their website here.    Recently, ABI named workforce issues its number one legislative priority for the 2018 session and reported many of its members have difficulty finding qualified workers. T...

Non-exempt employees – what counts as wages?

This blog is an excerpt from our book Wages and Hours – An Employer's Guide by Jill S. Kirila, Meghan E. Hill and Shennan Harris at Squire Patton Boggs. For more information, go to the Products tab above and click on "Federal" to subscribe.   Under the Fair Labor Standards Act (FLSA), “wage...

Do new hires have to be a culture club fit?

Do new hires have to be a culture club fit? Patty McCord, former chief talent officer of Netflix doesn't think so. READ THIS deep dive (3500+ words) from Patty, SHRM and Harvard Business Review.  In Patty's words: "The process requires:  probing beneath the surface of people and their ré...

Attendance policies

Needless to say, a company can’t operate (let alone succeed) if the employees aren’t showing up to work. But how do you ensure that your workforce will consistently report for duty? One good step is having a clear attendance policy. Communicating clearly about what are acceptable reasons to miss ...

Hiring interviews

This blog is an excerpt from our book Hiring, Firing and Discipline for Employers, authored by Frank Day, Robbin Hutton and Jessica Asbridge at Ford Harrison LLP. For more state specific information, go to the Products tab above and subscribe to the Human Resources Manual for your state.   ...

Vacation policies and time off

Not all employers provide employees with vacation time, but for those who do it is wise to have a clear, well-enforced policy in place to prevent confusion and help employees understand what steps need to be followed in order to use their time off. If employers decide to provide time off they nee...

Employment references

Finding new employees can be stressful. Sure, an applicant will say they are a hardworking overachiever, but are they being honest? That's where reference checks come in. For most positions, it is beneficial for an employer to request and contact previous employers to check on perspective employe...

Employee handbooks – getting a handle on your policies

While there may be no state or federal law requiring an employer to have a handbook, there are a number or reasons why they are in an employer’s best interest.  Usefulness. It is beneficial for there to be one definitive source on the terms of employment. If an employee ever has a question ...

Employee personnel files

As an HR professional you are no stranger to paperwork. It seems that for every employment action – applying, interviewing, hiring, disciplining, on and on – there is a specific form that needs to be filled out. Making sure you complete the paperwork properly is only half the battle though. Once ...