Several questions to ask when negotiating work contract
Published 10/01/04

Sometimes employers provide employment agreements to certain top executives or other highly skilled job candidates to clarify what is expected of the potential worker and possibly to induce the candidate to accept a position which may be more secure with such an employment agreement than the general employment-at-will relationship.

Furthermore, the candidate may have such impressive qualifications for a critical employment position so as to have leverage to insist upon such an agreement. If such an agreement is being contemplated, the following questions, although not exhaustive, may help the employer or job candidate in identifying potential terms and conditions for an employment agreement:

•  What are the titles, duties, and powers of the worker and to whom does she report?

•  What is the employment period, and is it renewable; if so, by whom and on what terms?

•  What is the worker's compensation and benefits including: (a) base compensation; (b) commissions and how and when earned; (c) bonus calculation including what discretion the employer has; and (d) benefits including: (i) group benefits available to all employees; (ii) additional life insurance; (iii) vacation and when it accrues and lapses; (iv) procedure for reimbursement of out-of-pocket business expenses; (v) 401k, other pension benefits, and when employer contribution vests; and (vi) stock options including when they will be granted and at what price, when they are vested and how long they are exercisable?

•  Under what circumstances may the agreement be terminated? Is the employee entitled to notice and possibly an opportunity to cure prior to being terminated by the employer for cause?

•  To what extent is there a limit on the worker's future right to: (a) compete against the employer; (b) solicit other employees away from employer; (c) use or disclose confidential or proprietary information of employer and what constitutes confidential or proprietary information? What is the consideration for these restrictive covenants?

There may be additional issues important to the employer and employee in any particular situation which should be discussed with your respective legal counsel.

Both the employer and the job candidate should consider each provision of an employment agreement very carefully since a Court, in enforcing the parties' obligations under the agreement, generally will look at the plain meaning of what is said, and not said, rather than rely upon any subjective, unmanifested state of mind.

It is therefore important to take the negotiation and drafting of the agreement seriously and to seek legal advice to assist you in protecting your interests.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.