Executive Contract Attorney San Francisco
Executive contracts are commonly found in almost all industries, including both nonprofit and for-profit companies. They outline salaries and bonuses, as well as benefits. These agreements can also include other clauses that can lead to legal issues if they are not handled correctly.
What Role Does an Executive Contract Play in an At-Will Employment State?
California is an at-will employment state, meaning that an employer or employee can terminate their relationship at any time with or without cause. Many employees still have contracts, but they only outline duties and pay. In most cases, they are standard documents that are used for all non-executive employees and only updated to include specific job responsibilities. They typically do not address employment security or include clear language that stresses the at-will nature of the relationship.
At the executive level, however, contracts are much more complex. They are individualized according to the needs of the company and the employee, and are often negotiated in order to ensure they benefit both parties. Because each contract is structured differently, they may address far more than job duties. Some include extra benefits, equity, bonus compensation and even employment security. This can raise legal concerns when the relationship ends, especially if the contract was not negotiated and written with the help of an experienced employment lawyer.
What are the Benefits of Negotiating Executive Contracts?
Executives are not hired using standard contracts because negotiating individual contracts with additional benefits allows the company to attract highly sought after talent for open top-level positions. The negotiations allow the employer to protect their higher level of investment in their executives.
At the same time, the positions with this type of contract are attractive to executives because they can use the negotiations to help move them closer to their personal objectives. They can also use these contracts to protect their rights in the event they are terminated or laid off.
Executive contracts commonly address compensation, benefits, and duties of the employee and responsibilities of the employer. They may also include equity arrangements. Sometimes they also address confidentiality, the preservation of trade secrets. In most cases, they include clauses about dispute resolution in the event that an issue arises.
How Can an Executive Contract Lead to a Lawsuit?
According to California law, there are some things that cannot be included in an employment contract. This includes non-compete clauses. These clauses are often used in other states as a way to prevent trade secret theft. They limit career prospects for employees, however, and may lead to legal claims if they are illegally included in an executive contract.
While not illegal, there are also issues that can be caused by a poorly worded contract. The most dangerous clauses that are commonly included in an executive contract involve salary agreements and employment security. A poorly written contract may inadvertently promise employment security, leading to claims of wrongful termination and breach of contract. Not upholding salary agreements may also lead to legal issues, including breach of contract or misclassification claims.