Executive compensation consists of the financial awards, remuneration, and other non-financial benefits received by an executive employee for his or her services. In most cases, it is a combination of salary, bonuses, stock and/or stock options, and benefits. Any compensation package, if properly constructed, should take into consideration corporate and tax law, regulations, the objectives of the organization and the executive, and incentives for strong performance. There are many aspects of executive compensation which make expert employment law counsel critical. Executives are one class of employees that is exempt from the requirements of the Fair Labor Standards Act and state labor laws. This means that employers need not worry about paying executives minimum wage and overtime. Additional compensation is frequently provided when the executive departs. A separation from employment leads inevitably to a negotiation over severance, health insurance, bonuses, non-disparagement, covenants not to compete, and confidentiality.
Oftentimes, when there is a separation from employment, there can be a myriad of issues which must be negotiated between the employee and employer. These concerns can involve complex issues related to compensation, benefits, and post-employment activities. In order to best represent one’s interests, he or she must be well-versed not only in Contracts Law, but Labor and Employment Law as well. To both employee and employer, a separation of the employment relationship is a minefield for the uninformed. There are a plethora of concerns that should be addressed. The old phrase, “Get it in writing,” holds true for both employers and employees. A detailed separation and release agreement, properly drafted and negotiated, constitutes a binding contract that will govern the rights and obligations of employer and employee alike. At Gilbert Law Group, we have prepared and negotiated these agreements for decades.
A severance package is compensation and benefits which an employee may receive when he or she resigns or is terminated from employment. If an employee resigns or is terminated, the terms of the resulting severance package are critical to the future financial well-being of both employee and employer. In addition to the employee’s normal salary, a severance or separation package may also include, but is not limited to:
- Payment based on months or years of service
- Compensation for accrued personal, vacation time or unused sick leave
- Monies if proper notice of separation from employment has not been given
- Health benefits and insurance
- Retirement benefits
- Stock options
- Unemployment insurance benefits
- A letter of reference
- Covenants not to compete or solicit
- Covenants concerning proprietary or confidential information
- Release of claims and waiver of right to sue
Severance agreements are more significant than many realize. The terms of a severance could prohibit a former employee from working for a competing business, use a company’s trade secrets to his or her advantage, and waive any right to possibly pursue a legal claim against the former employer. Also, an employee may be giving up the right to seek unemployment compensation. A skilled employment attorney should be contacted to assist in the preparation, evaluation, and review of a severance and/or release agreement.
The attorneys at Gilbert Law Group are well-qualified to negotiate, develop, prepare, and manage executive compensation packages at point of hire as well as separation from employment. We have successfully drafted, reviewed, and negotiated terms of compensation and employment, and terms involving separation from employment for countless clients.
At the Gilbert Law Group, we have the experience and understanding to devise and negotiate the best terms possible for our clients. Negotiation is an art form which Gilbert Law Group has mastered. Gilbert Law Group skillfully represents and incorporates our clients’ individual goals and objectives when negotiating the terms of an employment agreement or separation from employment, including non-compete, non-solicitation, and/or executive compensation provisions.
CONTACT Gilbert Law Group today: 631.630.0100.