October 6, 2020
By: Colin A. Walker
Most employees in the Unites States do not have written employment agreements and, in most cases, written employment agreements are unnecessary. However, with a C-Level executive, there are good reasons for a written agreement, including:
- Intellectual property needs to be protected.
- The employer may want restrictive covenants such as non-compete agreements and non-solicitation agreements to protect goodwill, trade secrets, and other interests of the employer.
- An abrupt departure of a key executive can harm the business.
- An abrupt termination of an executive, especially one subject to a restrictive covenant, can leave the executive “high and dry,” unemployed for a long period of time without the ability to earn a living in his/her chosen profession.
- Talented, highly sought-after C-Level executives may demand limitations on the company’s ability to terminate employment or may insist on severance pay.
In most cases, it is advisable — for an employer of a C-Level executive and for the executive—to have a written employment agreement. The terms of the agreement should be carefully considered and negotiated. In future posts, I will discuss the most important provisions of employment agreements.