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FAQ

Executive Contracts

The laws concerning employment contracts and executive compensation are often quite complicated, and it can be difficult to understand your rights. Below, we offer some guidance on frequently asked questions. However, keep in mind that this guidance is not exhaustive, and it is best to have an attorney help you understand your rights given your particular situation. Beranbaum Menken has a long track record of representing employees in executive compensation agreements and other contracts. Contact us to schedule a consultation.

Please keep in mind that different states and some cities have different wage & hour laws. These guidelines are based on the laws applicable in New York State. There are also many exceptions to the guidelines below, with some employees earning greater or les protection.

What constitutes a valid employment contract in New York?

In order to be valid in New York, an employment contract must contain most of the material terms agreed to by the employer and employee and be for a certain period of time (i.e., one year).

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I have an offer letter, is that a contract?

Many employees mistakenly believe they have entered into a valid employment contract or agreement with their employer but instead have entered into what is typically referred to as an “Offer Letter.” An “Offer Letter” is a short letter delivered by an employer to a prospective employee reflecting the employer’s offer to employ the employee and includes a few terms like salary, general job duties, job location and start date. An “Offer Letter” usually explicitly states that the intended employment relationship will be “at-will”and become effective when the employee accepts or signs it.  The offer letter is generally not a binding employment contract because it does not specify a beginning and ending date or time period.

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What does “at will” employment mean?

​An “at will” employee is not bound by a valid contract and who can resign from his or her job at anytime and for any reason. “At will” employees can also be terminated by the employer at any time and for any reason, except unlawful reasons (like discrimination or retaliation). Most employees are “at-will.”

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What can I do to protect myself if I am an employee “at-will?”

An employee “at-will” can attempt to negotiate terms in the “Offer Letter” that would require the employer to provide him or her with a certain amount of notice prior to termination or to pay an amount of salary after notice and before termination. Of course, if you are very marketable and the prospective employer has a strong interest in hiring you, you can insist that you will only work under a mutually agreeable contract.

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If I get terminated before I receive my bonus, and I have no contract and am “at will,” is there any

​Many executives and professionals in the financial industry are confronted with this situation. Frequently, you can argue that the bonus sought was an essential part of your compensation and an agreement to pay the bonus can be inferred from the conduct of you and your employer and the surrounding circumstances. This is not an express contract, rather it is called an “implied contract.”

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I have a contract that includes a bonus provision, but now my employer says they don’t have to pay

Your employer may be trying to withhold your bonus because your contract includes a “discretionary” rather than “mandatory” bonus. Or, if you have been terminated, your employment contract might only allow you to receive a bonus if you’re still on the payroll when bonuses are announced (often in January of the following year) or paid (often in March of the following year).

Although this predicament presents a challenge, we can still help you obtain some or all of your bonus based on principles of equity and “quasi contract.” If you are being denied a bonus to which you believe you’re entitled, contact us to schedule a consultation.

One way to avoid this kind of problem in advance is to negotiate a sign-on bonus and/or make a strong effort to negotiate a contract in advance where payment of a year-end bonus is mandatory or based on a clear, non-discretionary formula. If you are in a position to negotiate your employment contract in advance, contact us for a consultation.

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What terms should be included in my employment contract?

Critical terms that should be included in your employment contract are:

  • the length of the contract;
  • job duties;
  • compensation (including bonus, stock options, and commissions);
  • benefits;
  • basis for and financial consequences of termination;
  • definition of what constitutes “cause” for termination;
  • clear information concerning any non-compete and non-solicit agreements;
  • and clear information about what happens if the contract is breached (i.e., whether you can go to court or must arbitrate).

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What is a non-compete agreement and are they enforceable in New York?

A non-compete agreement, often contained in an executive employment contract, prohibits the executive from competing with his or her former employer for a reasonable time and within a reasonable geographical area after leaving employment. Non-compete agreements are generally disfavored by courts but will be enforced where the employer has a protected interest, such as confidential trade secrets or where the employee’s services are “special, unique or extraordinary.”

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What is a non-solicit agreement and are they enforceable in New York?

​Like non-compete agreements, non-solicit agreements are also often contained in executive employment contracts. Non-compete agreements prohibit former executives from soliciting or contacting the customers of their former employer and are enforceable if reasonable as to time and geography. However, non-solicit agreements that prohibit former employees from soliciting customers in the public domain or those customer relationships that were cultivated at a prior job are often found not enforceable.

The laws concerning employment contracts and executive compensation are often quite complicated, and it can be difficult to understand your rights. We hope the guidance above is informative, but it is not exhaustive, and it is best to have an attorney help you understand and protect your rights. Beranbaum Menken has a long track record of representing employees in executive compensation agreements and other contracts. Contact us to schedule a consultation.

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My contract includes a bonus provision, but now my employer says they don’t have to pay it. Why?

​Your employer may be trying to withhold your bonus because your contract includes a “discretionary” rather than “mandatory” bonus. Or, if you have been terminated, your employment contract might only allow you to receive a bonus if you’re still on the payroll when bonuses are announced (often in January of the following year) or paid (often in March of the following year).

Although this predicament presents a challenge, we can still help you obtain some or all of your bonus based on principles of equity and “quasi contract.” If you are being denied a bonus to which you believe you’re entitled, contact us to schedule a consultation. One way to avoid this kind of problem in advance is to negotiate a sign-on bonus and/or make a strong effort to negotiate a contract in advance where payment of a year-end bonus is mandatory or based on a clear, non-discretionary formula. If you are in a position to negotiate your employment contract in advance, contact us for a consultation.

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