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Patrick, Esq.
Patrick, Esq., Lawyer
Category: Employment Law
Satisfied Customers: 6767
Experience:  Significant experience in all areas of employment law.
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Im currently a highly compensated member of the senior management

Customer Question

I'm currently a highly compensated member of the senior management team at my company. We are owned by a private equity firm and so a change of control is always possible. My current contract states that I would get 2 months severance. If the new company tried to relocate me, change me title, asked me to sign an employment agreement I was not comfortable with, reduced my salary or otherwise significantly changed my role, and I refused, would they still be required to pay my severance? Although I do not have anything more than "discretionary bonus" in my contract, I was granted equity options with significant value and a large part of my total compensation is in the form of a bonus. Would I have any recourse if I was told that I'm not being laid off, but that my variable comp would not be nearly as high? If they did and I started working 40 hour weeks and refusing to work more and/or refusing to travel, would that leave me unable to collect the severance? My current employment contract specifically says that I can only be terminated without severance for "Gross Misconduct".

Also, if during an interview with them, they asked for my marital status and other personal family information and reacted poorly to my answer that I was married and had 2 young children, what would be the implications of that?

I live and work in CT, USA
Submitted: 1 year ago.
Category: Employment Law
Expert:  Patrick, Esq. replied 1 year ago.
Good afternoon and thank you for entrusting me to answer your question. I will do everything I can to assist you.

If your variable comp were substantially reduced, an individual in your circumstance may be able to argue that such a material change in the terms of your employment constitutes a constructive discharge. To prove constructive discharge, an individual typically must demonstrate that the terms of employment would compel a reasonable person to quit and that the employer had knowledge of the circumstances giving rise to resignation. Obviously, if your employer reduces your variable comp they have knowledge of the conditions that would give rise to constructive discharge.

Since the overall effect on your compensation would appear to be substantial, a claim for constructive discharge would therefore not be unreasonable. However, it would be wise to first write your employer and inform them that you believe such a reduction in your compensation will make continuation of your employment untenable and therefore amounts to a constructive discharge, thus entitling you to severance pursuant to the terms of your contract.

If you stayed on the job but started refusing assignments and work, that would almost certainly qualify as "gross misconduct" (direct insubordination) and thus disqualify you under the terms of your contract to receive severance.

Marital status is a "protected trait" under CT law, so an employer cannot premise adverse employment action on the fact someone is married or single. However, you would need specific evidence linking a termination or demotion to the fact you were married, which of course is usually very hard to come up with. For that reason, such claims are rarely successful in court.

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes to you and thank you so much for coming to Just Answer.
Customer: replied 1 year ago.
This is an excellent reply, but one part of my original question was missed.

" If the new company tried to relocate me, change me title, asked me to sign an employment agreement I was not comfortable with, reduced my salary or otherwise significantly changed my role...? "

Which of those do you think I would have a good chance of claiming were constructive discharge? Relocation, negative title change, new employment agreement (likely with some overbearing non-compete), etc.

Also as a follow up to your answer, do you think it is a problem that the variable comp and equity are not in my current contract? If they just chose to not address variable comp in discussions with me, could that shield them?
Expert:  Patrick, Esq. replied 1 year ago.
Joe,

Thank you for your reply and please excuse me for not specifically addressing these concerns in my initial answer.

Constructive discharge is judged on a case-by-case basis in consideration of the unique facts of each circumstance. The standard for proving constructive discharge, as noted above, is whether the employer intentionally created or knowingly permitted working conditions that were so intolerable at the time of the employee's resignation that a reasonable employer would realize that a reasonable person in the employee's position would be compelled to resign.

This is a rather high standard, and while a significant reduction in pay is usually sufficient, I am much less convinced that the other possibilities you describe (changing your title, duties, or asking you to sign a new agreement you aren't comfortable with) would create such intolerable conditions so as to compel your resignation. Sure, these things may cause you to want to resign, but the standard for proving constructive discharge is that you had no other option even though you wanted to keep your job.

Again, though, constructive discharge is determined on a case-by-case basis and is a "question of fact," meaning it would ultimately be up to a judge or jury to determine upon presentation of all relevant evidence. If I were a juror, however, I'd be inclined to find that only a substantial reduction in pay or a relocation to a different city would give rise to a claim for constructive discharge.

Also as a follow up to your answer, do you think it is a problem that the variable comp and equity are not in my current contract?

This gets tricky. I'd be inclined to say that, regardless of whether something is in your written contract, if you are being deprived of aspects of your compensation which came to be expected and which you relied upon, then that deprivation still constitutes a material change in the terms of your employment that could give rise to a claim for constructive discharge.

Again, please feel free to let me know if you have any further concerns. If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.

Kindest regards.
Patrick, Esq., Lawyer
Category: Employment Law
Satisfied Customers: 6767
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and 5 other Employment Law Specialists are ready to help you
Customer: replied 1 year ago.
Thank you! This was very helpful and I really appreciate the full, measured and thought our response.
Expert:  Patrick, Esq. replied 1 year ago.
Joe,

It was truly my pleasure to assist you--thank you for the kind words. If you ever have any further questions in the futures, please do not hesitate to come back and ask. I just wanted to say thank you so much for your positive rating of my service. It was truly my pleasure to be able to assist you.

If you have any further questions or concerns regarding the above, please do not hesitate to contact me in the future. Also, in the next day or so, you may receive a survey from Just Answer asking about your experience with me. I would be tremendously grateful if you'd take a moment to provide high marks, as your opinions are extremely valuable to the site and to me.

Best wishes moving forward.

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