A Washington, DC, employment agreement may include various provisions governing the terms of an employment relationship. Our law firm helps clients negotiate the following aspects of employment agreements.
Employment agreements can contain basic information about an employee’s position in the company, including their job title, primary job duties, and expected working hours.
An employment agreement can detail a Washington, DC, employee’s compensation package, which can include:
Employment agreements may also include provisions granting employees severance benefits upon termination without cause. A severance package may provide an employee with a lump-sum payment or “garden leave” pay, often in exchange for a longer duration on restrictive covenants.
An employee’s agreement may include a confidentiality provision that requires them not to disclose the company’s confidential or proprietary information, such as trade secrets, customer lists, pricing information, financial statements, or marketing plans.
Employment agreements can also include other restrictive covenants, such as non-compete or non-solicitation agreements, which restrict the employee during their employment and for a limited period after their employment ends. Non-compete agreements preclude an employee from engaging in business activities that compete with the employer’s business. Non-solicitation agreements prevent employees from contacting the employer’s current or prospective customers or suppliers or from hiring away the company’s employees to work in a competing business.
Employment agreements may require employees to assign any intellectual property rights they have in inventions or works they create in the course and scope of their job or through the use of company materials. IP assignment provisions usually require employees to cooperate with any procedures necessary for the employer to perfect its rights in work developed by the employee.
Although most states follow the “at-will” employment doctrine, which allows employers to terminate an employee at any time for any reason that does not violate laws or public policy, employers and employees can agree that the employer must have grounds to terminate the employee to avoid paying severance. An employment agreement can describe the grounds that constitute a “for-cause” termination and the procedures that the employer must follow to terminate the employee for cause.
Severance agreements govern the end of an employment relationship and establish the respective rights and obligations of an employer and employee. As a result, a severance agreement may address various outstanding issues between companies and employees. An attorney can help you negotiate the following common provisions included in severance agreements.
A severance agreement usually provides a departing employee with some form of compensation, often a lump-sum payment or a temporary continuation of all or part of their salary. Severance compensation serves as consideration for the agreement and provides employees with a financial bridge as they look for their next job.
Employers typically pursue severance agreements to obtain a mutual release of claims from a departing employee, especially if the employee has active or potential legal claims against the company, such as discrimination or retaliation.
A severance agreement may require the parties to keep its terms confidential or may bar the employee from making disparaging claims about the company in public.
Severances may also include restrictive covenants, such as non-compete or non-solicitation clauses, that bar the employee from engaging in competing activity against the company or from poaching the company’s customers or employees for a period after they depart.
A severance agreement can also address a Washington, DC, employee’s eligibility to apply for a position with the employer or any of its subsidiaries, parent companies, or affiliates.
At Bernabei & Kabat, PLLC, we want to help you make an informed decision about your professional and financial future in the Washington, D.C. metro area. That’s why we’ve provided the following answers to some of the questions we’re most frequently asked about negotiating employment agreements and executive compensation packages.
You can best protect your rights and interests by having an employment attorney review any employment agreement proposed by your employer. An attorney can help you understand the terms of a proposed employment contract so you know your rights and responsibilities. A lawyer can also identify potential red flags or areas of concern, such as one-sided provisions that unfairly favor the employer. Moreover, they can confirm whether the employment agreement complies with applicable state and federal law. Your lawyer can also communicate with your current or prospective employer on your behalf to negotiate more favorable terms if a proposed agreement contains unfair or unenforceable terms.
Most executive-level employees working in the Washington, D.C. area will have specific employment contracts with their employers. Given the unique, high-profile nature of an executive’s role in a company, their employment agreement should address terms such as:
An offer letter represents an employer’s preliminary offer of employment. Offer letters may outline the basic terms of a position, such as the title, primary duties, and compensation. An employment agreement can incorporate the terms of an offer letter into a more detailed, comprehensive agreement that covers other provisions, such as restrictive covenants or grounds for termination.
An offer letter may only provide a binding offer of employment subject to various conditions, such as approval by a board of directors or shareholders, or passing a background check or drug test. Conversely, an employment contract becomes a binding agreement upon the employer and employee signing it.
A “golden parachute” refers to an agreement between an employer and employee (usually an executive-level employee) under which the employer agrees to pay specific compensation should the company terminate the employee’s employment for reasons such as a change in ownership, merger, or acquisition. Golden parachutes incentivize employees and executives to continue working toward a deal that benefits the company, such as a takeover or merger, even if the transaction results in their job loss. Golden parachutes may have various triggering circumstances, including a change in control of the board or the company’s equity ownership, a merger, or an acquisition of the company by another business.
When your employer increases your role or responsibilities, you can request a renegotiation of your compensation package to reflect the additional work you will perform for your employer. Employers may offer a raise or additional forms of compensation after granting an employee a promotion or a significant increase in their job responsibilities. However, even if your employer makes no changes to your compensation package after increasing your role in the company, you can and should still ask to renegotiate your salary, benefits, and other compensation. Hiring a law firm can help you secure higher compensation commensurate with your new role during negotiations with your employer.
Courts generally uphold arbitration agreements in employment contracts. Some state laws limit the enforceability of arbitration clauses in employment agreements in certain circumstances. In contrast, federal arbitration law broadly favors the enforcement of arbitration agreements that employees have knowingly and voluntarily entered into. However, federal law prohibits employers from enforcing arbitration agreements for employees’ sexual misconduct claims.
Our employment law attorneys have negotiated numerous severance agreements and employment contracts over the years. We have experience in negotiating a wide range of issues that arise in severance agreements, with both government and private-sector employers. This includes addressing issues such as confidentiality provisions; noncompete and nonsolicitation provisions; allocation of payments; letters of reference; and mutuality of releases, and other problems that can come up in the termination of an employment relationship.
We also are experienced in negotiating individual employment agreements (contracts) for private-sector managers and executives. This includes issues relating to noncompete and nonsolicitation provisions; the grounds for ending the contract before its term or otherwise not renewing the contract; the provisions for severance pay when the employer terminates the contract; damages for breach of the agreement; and other contentious issues that can arise in establishing a contractual employment relationship.
Call Bernabei & Kabat, PLLC at 202.745.1942 or contact us online for experienced legal counsel.
