“The belief that you can have a meaningful career is the first step to finding one.”

- Sean Aiken

“I was just tired of seeking what people called ‘success.’ I’m now seeking significance,” is how a client explained to me the decision she made to pursue her interests, her passions, her dreams and to help “repair” her world. By every measure, she is now not only a significant person, but more “successful” than she ever was before.

© 2013 Alan L. Sklover. All Rights Reserved

[If you would like to contribute a favored quote, saying or proverb, please submit it to us at info@SkloverWorkingWisdom.com].

Here’s 18 Smart Steps to Guide You

“Complexity (at work) has opened a great divide between
those who have mastered its requirements and those who haven’t.” 

- Brink Lindsey, in his recent
  book, “Human Capitalism”

ACTUAL “CASE HISTORIES”: Carolyn contacted us when she was about to move from one employer to another. She sought our help going through her upcoming transition. Workplace transitions are our special area of experience and expertise. As we do for all of our clients, we asked Carolyn to send to our office all of her “workplace papers,” including offer letter, all agreements signed, employee handbook and benefit and equity plans and agreements, for review prior to our consultation. 

Our review of Carolyn’s written materials revealed one potential problem: a “Garden Leave” provision existed in her Stock Option Agreement. A “Garden Leave” provision says, in effect: 

“You must give at least 90 days written notice of resignation. During that 90-day period, we have the right to have you stay at home (and ‘tend your garden,’ so to speak) and have no contact with employees or customers. Of course, you cannot work elsewhere during that period. During that period we will pay your salary and provide benefits, but not accrued vacation, sick days or bonus. We have the right to shorten that period if we wish, and let you go sooner.” 

[Note that Garden Leave periods are commonly 30, 60, or 90 days, and sometimes even 120 or 180 days.]

Carolyn said that she was needed immediately by her next employer, and she was certain her next employer would not wait those 90 days for her to begin. From our point of view, having the freedom to work where and when you want to work is a valuable freedom, and should not be given up easily. We counseled Carolyn that, while she had signed an agreement, there was not very much her employer could do to her that should worry her all that much; if her next job was really important to her – and the right to take any next job in the future – she might decide to deliberately ignore the agreement, and then just deal with the “consequences” – if any. 

After discussing the matter with us and her next employer, Carolyn decided to make her move to her next employer, and to take the risks of doing so. As it turned out, they were not all that significant: (a) she had to forfeit about $22,000 worth of stock options, (b) she did incur some legal expense, and (c) she seemed to have “burned a bridge” that was, to her mind, not that valuable a bridge to begin with. Oh, yes: she had a few sleepless nights, too. 

In retrospect, Carolyn’s decision to ignore the Garden Leave agreement she had signed was a wise one. First, though she did receive a rather nasty letter from her employer’s General Counsel that threatened “legal action,” no such “legal action” ever took place. Second, though Carolyn did lose her unvested options, she was confident that the loss incurred would be more than made up by her anticipated increase in compensation from her future employer. Third, though the squabble with her employer did cause her to delay her start at her next employer by two weeks, that did not bother her next employer; Carolyn even enjoyed having some time off. 

Looking back, Carolyn shared our view that, with a few exceptions, Garden Leave is not very enforceable, and agreed that “The only thing you have to fear is fear itself.”

LESSON TO LEARN: In the past ten years or so, employers have begun to use a new technique to protect themselves when employees depart, called “Garden Leave.” First, it acts to deter employees from leaving at once because (a) it makes the next employer wait 30, 60, 90 or even 120 days for them to start, something many employers will not or cannot do, and (b) by keeping the employee bound to them – and out of communication with clients and colleagues – they make it very hard to take clients and colleagues with them. 

The idea behind Garden Leave is rather ingenious, some would say a bit evil, but in practical effect it is not iron-clad, that’s for sure. We have helped many of our clients navigate themselves around the difficulties imposed – or seemingly imposed – by Garden Leave provisions. 

Garden Leave provisions usually, but not always, provide that you will continue to receive salary and benefits, but not receive or accrue (a) vacation, (b) sick days, (c) bonus, (d) commissions, (e) equity vesting, or (f) other payments, benefits or perquisites.  

A Garden Leave agreement is a kind of contract. “So,” you might ask, “how can I just ignore it?” The answer is that, with a few exceptions, there is just nothing an employer can do to enforce it. Here’s the analysis: 

a. Sue for damages? What damages?” The law provides two basic ways to obtain a remedy for a “wrong” that was done. The first is what most people usually think of, and call a “lawsuit for damages.” That is, someone suing someone else for, say, $100,000. This is the first thing that most employers’ lawyers will threaten, almost always as mere “hot air.” 

It is quite rare for an employer to have actual financial damages that result from an employee’s departure. It is possible if, for example, the employee is an opera singer and the opera tickets have already been sold, or an investment banker whose absence is the direct cause of a deal not closing. But in the vast majority of employee departures, there are no direct causal damages. Without direct damages caused by the employee’s early departure, there is no legal basis for a lawsuit. 

Think of it this way: if your car ever-so-lightly bumped into your neighbor’s car’s bumper, and there was no dent or scratch caused by the light bump, and no passengers were injured, there is simply nothing to sue about or for. (That is why they are called “bumpers,” you know.) 

b. Injunction to be sought? To stop what? The second kind of remedy the law makes available to people who have been “wronged” is what lawyers call an “equitable” remedy, usually in the form of an “injunction” or sometimes called “injunctive relief.” This is not a lawsuit for money, but instead a lawsuit to ask a Judge to issue a Court Order demanding that someone stop doing something that is wrong. This is called an “injunction.”

If a labor union is striking in violation of law, a Court can Order the union – by issuing an injunction – to “stop the strike” and get back to work. Or, if a power plant is spewing forth toxic chemicals, a Court can Order the power plant to stop polluting the air, or even stop operating the power plant. But, if you are not working at your former employer, and not yet working for your new employer, what can the Court Order you to stop doing . . . watching TV? Playing golf? Spending time with your children? Hardly.

Sure, if you have transferred trade secrets or customer lists, or asked customers and colleagues to leave your former employer, those could be Ordered halted by a Court – maybe. But if you have not done those things, then there is nothing to “stop doing.” 

In case you are curious, a Court cannot issue a Court Order to force you to work. Ever since this country outlawed slavery, that is simply not an option. 

c. Threaten to sue your next employer? Possibly, but rarely more than a scare tactic. Your employer’s next attempt to “enforce” your Garden Leave agreement may well be by means of a threat – made to you and/or made to your next employer, if your present employer knows who that is – to sue your next employer for some vague offense, sometimes called “tortious interference.” This is almost always nothing but a baseless threat, without meaning or effect. While there is a kind of legal claim called “tortious interference,” it is not commonly accepted by Courts, and is even less commonly successful: 

First, there is nothing in the world wrong with an employer offering a job to an employed person; every employer does that at least once a week, if not daily; 

Second, almost every employee is what we call an “at will” employee, which employers are constantly reminding us means “Either the employer or the employee may end the employment relation at any time and for any legal reasons”;  

Third, even if your former employer claims the next employer knows of your Garden Leave agreement, just as noted above, it is almost always an agreement without any damages for breach;   

Fourth, if a lawsuit is begun by your former employer against your next employer, all the next employer has to do is simply end your employment relation to end any alleged “interference”; and 

Fifth, the truth is that, if anyone is “guilty” of tortious interference, by writing a letter threatening your future relation with a new employer it is more your former employer who is the one who should fear being sued, and not a future employer, who has every right to say to someone, “Would you like to work for us?”   

No one likes being threatened with a lawsuit, and no one likes being sued. It is the fear in the mind of your next employer that, if anything, can keep you out of work for the Garden Leave period, and thus must be addressed.

d. Make you forfeit past-earned monies? Yes, possibly. If you have deferred income, perhaps in the form of deferred bonuses, or unvested equity, such as unvested stock options, it is possible – though not necessarily the case – that the terms of your Garden Leave agreement or your bonus or equity “plan” provide that you will lose these monies if you (a) voluntarily resign, or (b) resign without honoring your Garden Leave agreement. 

This is a potential “cost” of leaving an employer, and should be looked into before considering a transition. It should be noted that, under some plans and agreements, you lose your deferred income and/or your unvested equity even if you are laid off, without cause. Check your plans; this may be important, or perhaps even inapplicable, to you. And, too, consider how much the loss is worth to you. 

Incidentally, there is a legal argument to be made that the employer, by establishing a forfeiture, has “set a price” on your ignoring your Garden Leave agreement, and thus cannot seek additional “damages” from you.  

e. Might they claim you were fired? Rare and overblown; One exception: Form U-5. Any time you leave a relation – be it friendship, dating, marriage or employment – you run the risk of your former “relation-mate” bad-mouthing you. In the employment context, this can take the form of your former employer giving you an undeserved bad reference. In this situation your former employer could claim that “This person was fired for bad conduct,” referring – dishonestly – to your not complying with your Garden Leave agreement.

With one major exception, experience shows that bad-mouthing by former employers is not as much a risk as most people fear it might be. One thing is for sure: you cannot stay in an unproductive or unhealthy relation based on the fear – which might not even be real – of your former “relation-mate” saying bad things about you. 

The one major exception is if you are a Registered Representative in the securities industry. In that case, when your employment terminates for any reason, your employer must, within 30 days of the termination, file a form called a Form U-5 explaining the reason(s) for your departure. It is not unheard of for a disgruntled employer to try to smear a former employee by filing a false, fraudulent and defamatory Form U-5. This possibility – however remote – is always to be taken into account and, as noted below, steps need to be taken to minimize the chances of this happening, and if it does, minimize the harm that might take place. 

WHAT YOU CAN DO: Garden Leave is certainly not something to fear, but rather something to navigate. However, as employment transitions go, it is a bit complicated, as it calls into play several different legal and negotiating concepts at the same time. 

Continue Reading. . .

Question: Hi, Alan. I was terminated by a company here in the U.S. that is based in Massachusetts. I live in New Jersey and have worked out of my home office from the beginning I am currently negotiating a settlement.

If I need a lawyer, how do I determine if they should be from Massachusetts or New Jersey?                                                                                                

D.M.
Morristown, New Jersey

Answer: Dear D.M.: Your question is quite common, increasingly so as people increasingly work distant from the their employers’ headquarters. Unfortunately, as you will see, the answer to your question is not as simple, clear and definite as you might like. But you asked, so here is the answer:            

1. As a general rule, you will likely want to hire an attorney who is familiar with the laws that are applicable to any issues that now exist (or may arise) in the course of your discussions and negotiations. Simple common sense would suggest that you would be wise to use an attorney licensed in Massachusetts if the issues in your negotiation are ones that require analysis under Massachusetts law, and the same goes for hiring a New Jersey lawyer to resolve legal issues of New Jersey law. 

Unfortunately, that simple, common-sense approach is often quite difficult to follow and does not really apply to severance or settlement negotiations, as will be further explained below. 

2. The laws that apply to any issues that might arise in your severance negotiations may be determined by an agreement you signed. Quite often, employers say to themselves, “Let’s make sure that if any employee takes us to Court, or gets into a legal hassle with us, it is our home state’s laws that apply, because this is where our lawyers are and they are most familiar with this state’s laws.” 

For this reason, it is common for employers to write into their employment-related documents, including (a) employment agreements, (b) job offer letters, (c) bonus agreements and plans, (d) stock and stock option agreements and plans, (e) retirement plans, and even (f) employee handbooks that “Any and all disputes that arise between the employer and the employee will be decided under the laws of the state where the employer’s corporate headquarters or home office is located,” or words to that effect. 

Thus, issues that arise related in some fashion to those documents would be resolved under the state’s laws that is noted in the document, and a lawyer licensed to practice in that state would likely be most familiar with that state’s laws.  

3. However, even if you signed an agreement like the one described above, the laws that apply to any issues that exist may be determined, instead, by the laws of the state where you worked. Most states have laws that provide that, if the employee worked in their state, certain issues arising in that employment relation must be decided under that state’s laws, no matter what agreements may have been signed. 

This started a long, long time ago, when the individual states became associated with each other as the United States. The idea was that each state is free to set standards for certain conduct within its own borders, and in the employment context those state standards include: (a) whether you need a license and a supervisor to act, for example, as a mortgage broker, (b) what workplace safety standards must be met by construction-company employers, (c) whether you are entitled to be paid for accrued but unused vacation days if you resign or are terminated, and (d) what the minimum hourly wage may be that is paid to workers. These “state-standard” laws vary considerably from state to state.

 So, an employee working in New Jersey, who believes she is due (a) payment for accrued but unused vacation, and (b) was also denied the legal minimum hourly wage, can file a legal claim using New Jersey law against an employer headquartered in Massachusetts, even if she signed an agreement that said, in effect, “I promise to use only Massachusetts law to resolve any and all disputes.”    

4. To further complicate matters, it is quite possible that the laws that apply to any issues that might arise in your negotiations may be federal laws, which would make which state your lawyer was licensed in entirely irrelevant. As an example, the primary laws that affect entitlement to overtime pay anywhere in the United States is the federal Fair Labor Standards Act (commonly known as “FLSA”). 

If the issues that arise in your settlement negotiations arise under or are related to FLSA, it would not matter in what state in the U.S. your lawyer was licensed to practice. So long as he or she was licensed to practice law, he or she could advise you on issues related to these laws, and with certain technical requirements met, could appear for you in any Federal Court. 

5. And – hold onto your seat – the issues that exist in your settlement negotiations may be those of (a) New Jersey law, AND (b) Massachusetts law, AND (c) federal law, all at the same time. D.M., it has happened to me many times: I am licensed to practice law in New York, I am assisting a client who worked in Texas, the company is headquartered in Connecticut, and then I discover that some of the issues involve Illinois law, as well.  

What an attorney does in these circumstances is to (a) try first to figure out what laws, IF ANY (see below) are applicable to the matter at hand, and (b) then determine whether he or she needs to consult a “local” attorney to assist on that issue. Frankly, it is not usually necessary.  

A few years ago, I was representing a man working in the African country of Namibia (the country immediately north of South Africa), and I had to determine how much notice, if any, was required to be given to terminate an employee. I contacted a Namibian attorney, luckily for  me who spoke English, and conferred with him on that particular issue. I have done that same thing in states all over the U.S. and in countries all over the world.    

6. All of these confusing and at times contradictory issues aside, it usually does not matter: an experienced severance attorney from either of those two jurisdictions, or any other jurisdiction for that matter, should prove just fine. I say this because in severance negotiations, most of the issues that require negotiation are truly “business” issues, not necessarily “legal” ones. Even as to truly “legal” issues, most employers do not think about “Who is right according to the law?” or even “Who is going to win in Court?” That is just not how business people usually think. 

Rather, what business people really think about is what really concerns them, as business people: “What will this cost me in terms of legal fees, the company’s reputation, employee morale, distraction from our main business focus?” and the like. These “business” issues, believe it or not, are far more prevalent and central in severance negotiations than are truly “legal” issues. It is this type of “legal” experience you need on your side. 

The reason you need an attorney in such discussions is more for his or her business and negotiation experience and acumen, and how well he or she can spot issues, negotiate resolutions, and draft agreements, and far less his or her “legal knowledge.” 

We offer a Model Letter entitled “To Employment Attorney – Seeking Information for Retention.” If you would like to obtain a copy for your use, just [click here.]  

If, as I did in my Namibian case, your attorney ends up needing local legal knowledge, or local court experience, he or she can then locate and secure it for you which, quite frankly, does not happen often.    

For your negotiations, you might be interested in our Master 94-Point Severance Negotiation Checklist, to give you the peace of mind and freedom from worry that you have forgotten to raise or entertain certain points of discussion and negotiation. To obtain a copy, just [click here]. Delivered by Email – Instantly! 

D.M., I warned you that this was not going to be “easy.” That said, I hope I did clarify a bit for you the real things you need to know and bear in mind when you hire an attorney in this field. Go with experience and compassion: the rest will fall into place.  

Best,
Al Sklover

P.S.: Since you will soon be looking for a new job, one of our most popular “Ultimate Packages” of forms, letters and checklists is entitled “Ultimate New Job Package” consisting of 9 items, including Resume Cover Letter, Thank You After Interview, Memo Confirming Terms Offered, Response to Offer Letter, our Master Checklist of Items to Negotiate, and 50 Good Reasons to Explain Your Departure from Your Last Job. To obtain a complete set, just [click here.] 

Repairing the World -
One Empowered and Productive Employee at a Time ™

© 2013 Alan L. Sklover, All Rights Reserved.

“Fear and prejudice put up a terrible fight when they see change coming.”

- Susan White

Change: it’s the only constant in life. And the workplace is a place of tumult and change like never before. Change is uncomfortable to most, dreaded by some, and fiercely resisted by others. Don’t fear change, and don’t fight it, either. Rather, anticipate it, and seek to be a part of it, for it permits growth, improvement and progress when driven in the right direction. Just don’t underestimate how much those who live in fear and prejudice will resist and fight it, with “all they got.”

© 2013 Alan L. Sklover. All Rights Reserved

[If you would like to contribute a favored quote, saying or proverb, please submit it to us at info@SkloverWorkingWisdom.com].

“God could not be everywhere and
therefore he invented mothers.”

Jewish Saying

To every mother, grandmother, and great grand-mother out there, THANKS. Today is Your Day. It’s even named after you. In case anyone hasn’t said it to you yet, THANKS for all you do, all you’ve done, and for the zillions of things you will do tomorrow and the day after that, too . . .

© 2013 Alan L. Sklover All Rights Reserved. Commercial Use Prohibited.