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socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 33868
Experience:  Retired (mostly)
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I have a retention agreement with my current employer, due

Resolved Question:

I have a retention agreement with my current employer, due to an unexpected change in CEO, my job has been suddenly changed and I believe the environment has become hostile because they do not want to pay me the retention bonus and severance extended by the immediate past CEO. Do I have any recourse? The agreement indicated I was an at will employee but it was extended with the intent to provide some security through December 2014, since the exiting CEO was expected to end his term in 4/2014. My job was cut in half today, I was told I need to be productive, and be happy about the changes, which many are not going to like. In addition my salary is now under review. Thanks
Submitted: 1 year ago.
Category: California Employment Law
Expert:  socrateaser replied 1 year ago.
Hello,

Labor Code 2922 permits employers to terminate employees "at will," unless the employment contract provides a specified term of at least one month. However, the bonus and severance may be required even if the contract is "at will."

If you could provide the relevant text from your contract, that would help me prvoide a more definitive answer.

Thanks in advance.
Customer: replied 1 year ago.
It does not include terms for the length of engagement as it was meant to be fluid. I understand they would have to pay me the bonus and salary if they release me but the question at hand is, can the changes be construed a hostile work environment and a constructive termination if they keep taking away responsibilities and state they are going to reduce my pay, which would ultimately cause me to quit. If I resigned because of the changes and decrease in pay, are they required to pay me the 30% retention bonus and 6 months severance t wages at time of agreement, which by the way was never updated to capture a salary increase retroactive to 4/1/12, the agreement was executed 8/26/12.
Expert:  socrateaser replied 1 year ago.
The question at hand is, can the changes be construed a hostile work environment and a constructive termination if they keep taking away responsibilities and state they are going to reduce my pay, which would ultimately cause me to quit.

A: Hostile work environment requires a connection with discrimination based on race, color, nationality, ancestry, religion, sex, sexual orientation, pregnancy, age or disability. Unless you can connect your demotion to unlawful discrimination, there is no hostile work environment, as a matter of law, regardless of how objectively "hostile" your employer may be to your presence. And, since you are an "at will" employee, there can be no constructive termination, because no amount of hostility is sufficient to avoid the your "at will" status.

If I resigned because of the changes and decrease in pay, are they required to pay me the 30% retention bonus and 6 months severance t wages at time of agreement, which by the way was never updated to capture a salary increase retroactive to 4/1/12, the agreement was executed 8/26/12.

A: This is the part that I cannot answer definitively without reviewing the contract terms and conditions. If the contract grants you a bonus if you remain employed to some future date certain, and the employer makes your employment so untenable that no reasonable person would remain employed, then that could be a breach of the covenant of good faith, at least to the extent that you have been prevented from obtaining the benefit of the bonus and severance by the employer. But, it could also be viewed as simply the employer exercising its right to manage its business and by quiting you relinquished your right to the bonus and sevarance.

On the other hand, if the bonus and severance attached to your contract immediately, then it wouldn't matter when you quit or were terminated, because your right to those benefits have already vested.

Those are the possibilities. That's as close as I can get without reading the contract.

Hope this helps.

socrateaser, Lawyer
Satisfied Customers: 33868
Experience: Retired (mostly)
socrateaser and other California Employment Law Specialists are ready to help you
Customer: replied 1 year ago.
Ok so what would it cost for you t review the agreement, and how do I confirm your expertise? I am willing to pay if necessary for a true consult as I want to ensure I do not endure harm or additional stress for n cause, I already worked through a serious medical condition at the request of the pas CEO, and experienced many health setbacks, do not want to suffer unnecessarily if I will end up getting relaxed and not have a guarantee of receiving what was promised to me.
Expert:  socrateaser replied 1 year ago.
I regret that I only answer general questions about the law in this forum. I am retired and I do not take any clients under any circumstances. So, if you are looking for a formal review from legal counsel who will represent your interests in direct negotiations, arbitration or litigation, then I am not the person you're looking for -- regardless of my credentials.

My offer to review the text of the contract was based on trying to give you a more definite answer -- and it would not have cost you anything further, because you are in total control of what you choose to pay in this forum. And, you can still provide that text if you wish and I'll give it a "once over," without further charge.

But, that's the best I can do for you here.

For a formal review, you will have to hire local legal representation, the "old fashioned way." For a competent employment rights attorney referral, see this link.

Hope this helps.
Customer: replied 1 year ago.
Ok thanks, is it too late if I forward the agreement tomorrow or would that be another fee? Not on my person at this time.
Expert:  socrateaser replied 1 year ago.
It's up to you to decide whether or not you would like to pay anything additional. I "justanswer" the questions.

Obviously, I won't be bummed out if you were to give me a tip/bonus. I'm a lawyer, after all.

Attachments are only available to registered users.

Register Here


Night.
Customer: replied 1 year ago.
Excellent, till tomorrow then. Good night
Customer: replied 1 year ago.


Hello again, we communicated earlier in the week and I stated I would forward a copy of the retention agreement, I have redacted the employer name to ensure this remains confidential, certain you understand. Below you will also find a copy of the message I received from our new CEO this week after a meeting this week, which reascertain my the concerns voiced earlier in this conversation.


 


Attachment: 2013-01-10_071716_erika_spath_special_retainer_agreement_redacted.pdf


Thank you for taking the time to meet this morning with Fernando and I to discuss your updated


role, responsibilities and new job title. As discussed, we are eliminating the Chief of Staff position


within the organization. Your new title will be Human Resources Director. You salary will remain


at the current level while we conduct an evaluation of your responsibilities to ensure that we are in


compliance with the HSF compensation policy. In addition, the position of Human Resources


Director will be reporting to the CFO, so you will now be reporting directly to Fernando. He will


supervise your work and be responsible for conducting your evaluation. Finally, please relocate


your office to the second to the last office on the bank of offices on the Southwest side of the


building. Please coordinate with Suzanne to put a lock on your new door as well as locks on the


Fernando’s office, my permanent office and my temporary office.


To avoid any confusion, below are the specific tasks/projects that others will now be responsible


for:


• All Board of Director, Executive Committee and Committee communication – Fidel &


Suzanne


• General Office Management including assignment of office space, general office needs and


any office building issues – Fidel, Fernando & Suzanne


• Risk/Corporate Insurance – Fernando & Fidel


• Verizon and Computer equipment access & assignment – Suzanne, Fernando and Hector


• IT trouble shooting and Miles Consulting HSF contact(s) – Fidel (Contract lead), Suzanne


and Hector (Techical Lead)


• Email set up and password change access – Hector(Technical Lead), Fernando & Fidel


(Contract Lead)


• Signor responsibilities for fund raising proposals – Fernando, Cristina & April


• Contract signature authority – Fidel, Cristina and Fernando


• Quarterly staff meeting logistics – Suzanne


• Access to Board Portal - Suzanne, Fidel and Fernando


• All staff communication not related to HR (HR communication must be cleared with


Fernando) – Fidel & Suzanne


In addition to your existing HR duties and other projects not listed and/or reassigned, we need you


to complete the following projects:


• OAMS to Salesforce link


• Mail data base clean-up - use returned mail and update addresses or delete names from


the data base if the address is unknown


• Complete Sharepoint Intranet Project


• Ensure staff directory is accurate and updated for current staff


• Ensure everyone is using Lync as designed


• Add pictures to the staff that do not have one



If there are any projects that you are currently working on that are not listed, please discuss with Fernando to clarify any questions.


I appreciate your professionalism and look forward to continuing to work together to strengthen the organization.



let me know if you are not able to view the agreement, I can try to copy and paste the verbiage from the PDF file.



thank you,


Expert:  socrateaser replied 1 year ago.
Hello again,

The agreement is pretty straightforward. Comments (ordered by issue, rather than numerically):

Section 4.3. The agreement makes employer and employee subject to any employment policies (handbooks, guides, memos), to which the employee has reasonable notice (n.b., without notice, the employee would have not relied on the policy, so any unnoticed policy changes would not supplement the employment agreement). However, since the agreement "prevails" in the event of a conflict, nothing can contradict the agreement via a subsequent change in employment policy, unless that policy change expressly states that it shall control over any prior employment agreement.

Section 5. The section re termination of employment, while somewhat clumsy in design, is subject to reasonable interpretation:

Section 5.1. The parties may terminate the agreement upon whatever terms they may mutually agreeupon at the time of termination.

Section 5.2. Termination due to death or disability requires that the employer honor the termination by employer not for cause, because the employee is entitled to whatever benefits may have accrued as of the termination date, which would reasonably include the benefifs of the employment agreement -- one benefit of which is the right to severance under the termination not for cause provision described in Section 5.4. My intepretation is not express in the agreement, and could be subject to reasonable dispute -- however, since death and disability is not really the concern, here, I'll leave the possible arguments for each side without further discussion.

Section 5.3. Permits the employee to terminate the contract without cause and thereby force the employer to pay 30 days pay, as long as the employee is ready, willing and able to continue employment for the duration of the termination period. Employer could terminate the employee immediately upon employee's 30-day notice, but would still owe the employee 30 days pay.

Section 5.4. Permits the employer to terminate under conditions not described in the "cause" termination provisions of Section 5.5. If termination is other than for cause, employee is entitled to the severance payment described in Section 5.4.

Section 5.5. Permits the employer to terminate for the specific cause-based reasons stated in the section, and thereby avoid paying the severance due under Section 5.4.

Section 3.3. Provides for a bonus only if employee works "diligently" through 12/1/2014. Termination by employer without cause appears to cut off the employee's right to the bonus. However, as this result is ambiguous, a court/arbitrator could interpret this against the employer, as a breach of the implied covenant of good faith. That is, the closer the employee's tenure approaches 12/1/2014, the more a termination of the employee without cause would begin to appear to be a method of avoiding payment of the bonus, and instead a method of preventing the employee from receiving the benefit of the bargain: the bonus in exchange for the employee's diligent work.

Courts/Arbitirators are generally required to interpret ambiguities against the draftsperson. Assuming that this contract was drafted by the employer, then I believe that a termination without cause under Section 5.4 could require the payment of the bonus as a breach of the implied covenant of good faith. But, I can see how a court or arbitrator could rule that no bonus is expressly required, even if the employer terminates the employee without cause on Nov. 30, 2014.

Section 1.1. Describes the job as "Chief of Staff," but does not describe job duties -- making the title superfluous, unless there is a job description for Chief of Staff found in the employer policies, guides, handbooks, etc. Assuming that a description exists, then the employer cannot modify the employee's job duties, except upon mutual written agreement, as per Section 5. Employer's option would be to terminate the employee, under Section 5.4 and then rehire under a new contract. This would mean that employee is entitled to the severance described in Section 5.4, because the changes required by the CEO represent either a breach of contract under Section 1.1, or a termination under Section 5.4.

If there is no Chief of Staff job description found in any of the employer's policies, then the employer can change the employee's job description at will, and there is no breach. Of course, the HR manager is generally responsible for maintaining the job descriptions of all employees, so I'm pretty sure that there is a job description for Chief of Staff [wink], and that it has been in place for substantially all of the employee's tenure with the employer.

Section 3.1. Concerning a change in salary, once again, absent an express written agreement between the employer and employee, the employer cannot change the employee's salary, should the employee object. The employer's sole recourse is to terminate and then offer a new contract.

Summary. As with practically every employment contract, the employer has struck a bargain with the employee that is mostly illusory and now seeks to modify unilaterally, with the implied threat of immediate termination, unless the employee submits.

I cannot advise you as to whether or not to push back -- you certainly have grounds to do so -- but, you could find yourself terminated immediately without cause, and then fighting to receive your 26-week severance, which you can bet the employer will attempt to avoid paying.

Hope this helps and good luck!
Customer: replied 1 year ago.

Most helpful, thank you. A little more help please, at the rate this conversation is progressing I will certainly provide a nice tip, thanks.


 


In section 4.3 it reads that the agreement supercedes the handbook unless explicitly written therein, the current handbook reads:


 


This Handbook is not a contract of employment; however, all employees are responsible for following all the policies and terms presented herein.If you have signed an Employment Contract, the terms of the Employment Contract will supersede the Handbook terms only in the event of a conflict in terms; otherwise, each document applies


 


Hence,I presume my agreement supercedes it; so now if the CEO opts to change the handbook it would not void my agreement still, correct.


 


The agreement was drafted by an external (paid) consultant at the request of the employer and approved by the immediate past CEO, so that is good.


 


Regarding the title and pay, these were modified by the immediate past CEO and made retroactive to 4/1/12, he had intended to draft a letter to ammend the agreement but never got around to doing that because of the sudden change in leadership. Does this matter? Or can I expect to be paid at the lower rate, the one captured in the agreement. Also the job description for Chief of Staff does exist.


 


If I were to push back, what do you believe would be the odds they would be obligated to pay, the firm already has two lawsuits for employee discrimination, not sure if that would be good for me or not. The immediate past CEO could testify to his intent if subpoenad, he can testify through mediation right? not sure how that works.


 


Do you happen to have a recommendation of a counsel in SFO, I may need to procure services. The new CEO is currently reviewing the agreement and has asked to speak with the consultant which drafted them, I fear he is trying to find a way to get out of it, do you think that is feasible? I do not want to lose my job but if I do, I want to get paid and not be forced out through a constructive termination, which this appears to be.


 


Thank you again.

Expert:  socrateaser replied 1 year ago.
Hence,I presume my agreement supercedes it; so now if the CEO opts to change the handbook it would not void my agreement still, correct?

A: Changing the employment policies to avoid the contract terms would be a breach of the implied covenant of good faith (ed. op.), because the purpose would be to prevent you from obtaining the benefit of the bargain.

Regarding the title and pay, these were modified by the immediate past CEO and made retroactive to 4/1/12, he had intended to draft a letter to ammend the agreement but never got around to doing that because of the sudden change in leadership. Does this matter?


A: It could be argued that your contract does not permit any modification except in writing. Strictly speaking, the contract only prohibits "termination," except on the terms and conditions therein stated or agreed to between the parties in writing. So, modification could be implied by conduct between the parties. The question at this point is whether or not you have actually agreed to the modification. Your argument is "no," because you haven't had a reasonable amount of time to consider the agreement. The employer's argument is that if you work one day after you receive the modified job description, that you have agreed to it by accepting employment by your labor.

 

I don't know how long ago this change was made by the former CEO. Moreover, maybe the former CEO rescinded the change after being told that his/her services were no longer needed. Maybe you never received the job reassignment notice. I don't have enough facts, however, I can see where a dispute here could go either way. It's a question of whether or not the modification operates as a means of avoiding the termination provisions. That's what I would argue, in order to avoid the modification issue entirely.

 

Or can I expect to be paid at the lower rate, the one captured in the agreement. Also the job description for Chief of Staff does exist.

 

A: It's one thing to change an employee's compensation to their benefit -- another to change their job description to their detriment. The difference is that you can accept one and reject the other. You didn't offer to change your salary or your job description, so it's up to you to accept the modification or claim breach of contract. You can accept the salary increase and reject the job change.


If I were to push back, what do you believe would be the odds they would be obligated to pay, the firm already has two lawsuits for employee discrimination, not sure if that would be good for me or not. The immediate past CEO could testify to his intent if subpoenad, he can testify through mediation right? not sure how that works.

 

A: I can't give you odds. I think you have a viable legal argument, but the arbitrator may be prejudiced to favor employers -- and that can change everything. The good news, in my opinion, is that this case apparently would be arbitrated in the "Republic of San Francisco," which generally favors individuals over institutions -- so, there is a better chance of finding an arbitrator who may lean in your direction.

 

Do you happen to have a recommendation of a counsel in SFO, I may need to procure services. The new CEO is currently reviewing the agreement and has asked to speak with the consultant which drafted them, I fear he is trying to find a way to get out of it, do you think that is feasible? I do not want to lose my job but if I do, I want to get paid and not be forced out through a constructive termination, which this appears to be.

A: I can't provide direct referrals. The best I can do is give you the State Bar of California lawyer referral service links (click here). Re escaping the contract, I don't think that there is any way out entirely. The contract is pretty straightforward. The question is whether or not the job modification is really a termination in disguise. I think it is, but I'm not the arbitrator.

Hope this helps.

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