C-Level Law

Many companies use stock options or other types of equity incentives to incentivize key employees. Usually stock options are issued under a written plan and an option agreement that you will be asked to sign. Those documents contain important provisions that you need to understand before accepting the stock options.

“May you live in interesting times” goes the ancient Chinese curse (actually, it’s British) and we are certainly living in interesting times. While most of our attention is focused on the still undecided Presidential election, there were other important election developments that are confirmed.

Attracting and retaining key employees is one key to a company’s success. Equity incentives offer a way to incentivize high performance and reward loyalty.

Garden Leave, doesn’t that sound nice? A little historical color: in England, some employees would agree to a period of time just before the end of their employment during which they would be paid, but would not work.

A common and important provision in many executive employment agreements is a non-compete agreement and/or a non-solicitation agreement (also known as restrictive covenants). In most states, there are limits on the enforceability of non-compete agreements.

Most employees in the Unites States do not have written employment agreements and, in most cases, written employment agreements are unnecessary.

From time-to-time, I am going to deviate from issues which relate specifically to C-Level Executives and discuss employment law issues which apply to all employees (C-Level Executives, after all, are employees and are subject to the laws which govern the rank and file). This is particularly important with new and emerging employment laws.  

A common strategy to try to manage costs of a new business is to retain workers as independent contractors (sometimes misleadingly called “1099 employees”), rather than as employees. However, not all workers can be retained as independent contractors.

In most states, some employees—regardless of any contractual obligations—owe a duty of loyalty to the employer, which is similar to a fiduciary duty, but not identical.

Poorly written (and unwritten) commission agreements have spawned a plethora of litigation. Commissions should be carefully thought-out and set forth in a clearly written commission agreement signed by the company and the C-Level executive.

In the start-up phase of a business, cash flow is often a difficult issue. R&D, equipment outlays, leasing and other costs often strain the finances of a new business.