Be on the lookout for . . .

“Voluntary,” as in “Voluntary Departure,” “Voluntary Resignation”
or “Voluntary Waiver”

You’re quite likely to find the word “voluntary” in several work-related legal documents. If you do notice it, that word may be very advantageous to you.

Generally speaking, “voluntary” means “done on one’s own free will.” It is synonymous with discretionary, unforced and optional. In legal documents, it often suggests that the act described was not required, not coerced, and not demanded.

Let’s say that, according to your employer’s Annual Bonus Plan, you are not entitled to your annual bonus if you “voluntarily” resign before the day it is paid. What if, two weeks before bonus payment date, you resigned and left your job in fear that your boss might beat you up in one of his infamous uncontrolled rages?

Was your departure “voluntary?” I’d say no. Are you entitled to your annual bonus? I’d say yes, although I’m confident that most employers would disagree.

You have a strong, reasonable and likely winning argument that the bonus is yours, so long as you spot, appreciate and point to the word “voluntary.”

In Repayment Agreements, you might promise to repay your employer in, as examples, a Sign-on Bonus Agreement, a Relocation Expenses Policy, or a Tuition Assistance Plan if you “voluntarily” leave before two years of service. What if you left earlier than that because, all of a sudden, your salary was reduced by 40%, and your family likes to eat three meals a day? (Some kids demand 4 or 5!!)

Is feeding your hungry family “voluntary?” I’d say No. Was your departure to take a better paying job truly “voluntary?” I’d say No. For this reason, you have a very good, and probably winning, basis to argue, with likely success, that your repayment is not required.

So, in this circumstance, too, you may very well not have to repay any sign-on bonus, educational assistance, etc., so long, that is, as you spot, appreciate and raise in your defense the word “voluntary.”

The same goes for whether a Non-Compete Agreement is valid or void, according to its own words. If the non-compete says it is valid if you “voluntarily” leave your job, and you can show that you are allergic to the new paint used throughout the office, then it is void as to you, so long, that is, as you spot, appreciate and raise the word “voluntary.”

There are many other legal documents that may contain the word “voluntary.” Look for “voluntary” in any and every workplace document, whether in an agreement, a company policy, an Employee Handbook, Stock Award, or other document.

You may be VERY GLAD you did.

Need a model memo or letter to transmit a request or complaint? A good checklist or form agreement? For a complete list of our Model Letters, Memos, Checklists and Sample Agreements, Just [click here.]

Interested in Membership? It’s free, and has advantages, including discounts on our products. Just [click here.]

Need a private telephone consultation? Just [click here.] Evenings and weekends can usually be accommodated.

“Your Path to Dignity at Work”™

© 2019 Alan L. Sklover All Rights Reserved and Strictly Enforced.

 
“I am no longer afraid of the storms for I am learning how to sail my ship.”

– Louisa May Alcott

ACTUAL CASE HISTORIES: Kalisha, 44, had worked for six years as the Financial Controller of a St. Louis-based, family-owned lighting distributor. After three generations of family ownership, during which the staff grew from two to 150, the grandchildren-owners received an inquiry from a Private Equity firm about their interest in possibly purchasing the company. With assurances that each grandchild would likely make many millions of dollars when, three to five years later, the “re-invigorated” company was to be sold. It didn’t take long: they decided to “cash out.”

Pretty soon, the Private Equity firm, their lawyers and their accountants began reviewing the company’s financial records, bank statements, leases, employment agreements, all as part of their “due diligence,” upon which their formal “offer” would be based.

It did not surprise anyone when the company’s owners called for a meeting of the company’s executive team to announce what was happening. At that meeting, the overall message was clear: “This is a great opportunity for everyone. There will be bonuses, there will be stock ownership, and this will be a golden opportunity for everyone . . . So long as you stay on board, work hard, help make the company a greater success, we might just make enough money to never work again.” Wow.

Then, four months later, without warning, the management team were called into a conference room, given documents to review, and told they needed to be signed by the next morning. Each executive received six documents, some one page long, some tens of pages long, each nearly impossible to understand due to their dense legal wording, multiple definitions, and confusing cross references. When some people asked for a chance to have their attorneys look them over, they were sternly warned, “What are you going to do? Don’t you trust us? Don’t ruin this for everyone.” To make a long story short, everyone signed, and no one ended up happy.

As Private Equity investors increasingly assemble “private equity” – meaning investments from college endowments, individual investors, pension funds, and religious organizations – this scenario is playing itself out scores of family-owned companies each day.

LESSONS TO LEARN: The commonplace understanding of employment agreement negotiation is a rather simple, three-step process: (i) first, the employer provides the employee with a draft document; (ii) then, the employee and his/her lawyer look it over, (iii) finally, the employee’s lawyer and the employer’s lawyer discuss, and negotiate, mutual concerns. With few exceptions, that is not how Private Equity investors and owners operate today with companies they purchase in order to sell.

With few exceptions, Private Equity investors (a) buy, (b) change, and (c) resell companies over three to five years. They are not long-term investors. They seek the best possible return for their investors and themselves, and do anything and everything they can think of to do just that.

The problem is this: to do so, they often promise the sky, and make sure the “papers” provide little or nothing of that. Instead, they tend to (a) reduce employee overhead (meaning salary and benefits), (b) manage to avoid paying out “suggested” promised bonuses and stock or other forms of equity, and (c) make sure that the agreements that they require employees to sign provide them the right to do just those things. Generally speaking, over time, they will bring in their own executives whose job is to sell the company, not to run it. They have no loyalties; they have only greed, and the legal help to get them what they want. Unless wisely resisted.

Do they want anyone to know or understand what they are signing? No. And they are good at it. Remember: (a) Buy, (b) change, (c) sell, within three to five years. And to do so they engage in what I call “hurricane tactics.”

“Hurricane Tactics” are what I call the use of seemingly overwhelming force, in an atmosphere of near-blindness, by among other things a “blizzard of papers,” so that the course of events proceeds this way: (1) rather vague assurances are made to employees of great opportunity and fortune, provided the employee agrees to remain and work hard for several years, however (2) without any solid commitments being made to ensure the employer fulfills those vague assurances. Instead (3) the agreements are chock full of provisions by which the employer is enabled to avoid and evade any commitments, of any kind, to the employee.

A. What are these “Hurricane Tactics?”

1. Lack of Clarity: The use of words, phrases, definitions and dense, complicated language an experienced employment attorney has a devil of a time understanding. There is simply no good reason to draft legal documents no one can understand; only bad reasons. (See the next section: The documents almost always say, one way or another, that if there is anything unclear in the documents, the “Management” has full and final say about what it means);

2. “Unlimited Leeway”: Provisions in the agreements that give to employers the sole, final and unreviewable decisions – like “sole and unreviewable discretion” – as to what a document means, or what constitutes “reasonable,” “promptly,” “bad faith,” “adequate performance,” “cause” and “misconduct,” to name just a few, making those words and phrases essentially meaningless;

3. “Subject-To” Provisions: Phrases that make the employment-related agreements “subject to” other documents that are not provided for review, such as the Limited Liability, LLC Operating, or Shareholders’ Agreement. Others, such as the “Award Agreement” for stock or options are often not even drafted yet. “Subject to” means that this document is subservient to other documents, and that those other documents govern and control in the event of any inconsistency, conflict or dispute. But it is almost always the case that you have no right to change those other documents, and they do, without telling you. (See the next section.)

4. “Incorporation by Reference” of Other Documents that are Changeable Unilaterally: As examples, the three agreements noted in the preceding agreement are controlling, and each of them provide that they can be modified at any time, without notice. So, if an employee is provided 2% of the company’s shares, these documents can permit 10 million new shares to be sold, making the employee’s ownership not 2% of the company, but 0.00002 percent. So these “incorporated by reference” documents can make the one you are signing essentially meaningless.

5. Coercion by Last-Minute Lateness (“Don’t be the one who spoils this for everyone.”) Perhaps most cynical of all, the practice of providing the employees only a day or even just hours, to review several documents consisting of hundreds of pages, and no real opportunity to even find or retain an attorney, to request changes or otherwise negotiate.

In one instance, my client was given only 30 minutes to sign several documents, and only the signature pages of the agreements were given to her to sign; the substance of the agreements were not provided, so she had no idea what she had agreed to. For Private Equity investors, that means “Mission Accomplished.”

So, those are the fundamental elements of the “wind-in-your-face, rain-in-your-eyes” hurricane tactics. Is it possible to successfully negotiate against these “Hurricane Tactics?” Yes, it is, and I’ve found the best way is to use what I call “Umbrella Negotiating.”

B. So, What is this “Umbrella Negotiation?” Simply, focus on two things: (i) Firm Footing (what I call “Positional Leverage”) and (ii) one Document that Covers Everything (an “Umbrella Memo”). By those phrases, I mean the use of two concurrent strategies, (i) “positional leverage” before the hurricane arrives, and you are exposed to its unsettling and disorienting “elements” and (ii) preparation of one single – and rather simple – document that covers you regarding all other documents, in all events, just as a strong umbrella does in a hurricane.

“Positional Leverage” and “Umbrella Memos” are explained in greater detail below. Simply put, for now, it is being on your firmest footing, and projecting your points in the negotiation as soon and as clearly as you can.

“Umbrella Negotiation” serves to hold back the strong wind, protect against the furious rain, and permit you to both see what is going on around you, and to stand up to it, not getting overwhelmed, drenched or “hosed.” The elements of “Umbrella Negotiation” are explained below.

Is it easy? No, but with a little effort and energy, it’s not impossible, either. Is it effective? Yes, it can be very effective, and I truly believe it is the most effective way to address Private Equity “Hurricane Tactics.” Just as David defeated the more-powerful Goliath with a firm footing and a single, simple weapon, so too can you prevail in employment negotiations with Private Equity investors or owners.

WHAT YOU CAN DO: These are the “Umbrella Negotiating” steps that I employ in these circumstances and they are in my experience the most effective way to negotiate employment agreements of nearly every kind:
Read the rest of this blog post »

In contracts, what is meant by:

“Boilerplate?”

Often people refer to certain provisions of an agreement as “boilerplate.” For example, it is quite common that a client will say to me “The agreement I need you to review is mostly boilerplate, so it should not take long to review.”

What do people mean by “boilerplate?”

Many years ago, “boilerplate” referred to extra metal plates that were wrapped around a boiler to limit damage if the boiler blew up. They were often unneeded and used more for show than for effect.

As commonly used today, “boilerplate” refers to provisions or sections of a contract (1) that are “standard,” (2) don’t much affect the contract’s “important points,” (especially those that refer to money matters), and (3) so, don’t really need to be reviewed carefully.

Beware: each of those three statements are wrong, more wrong, and even more wrong, and it’s better you learn that here and now, and not “the hard way.”

First, there is no such thing as a “standard” contract clause or “standard” contract language because every employee, every employment relation, every word and every punctuation mark in a contract or agreement is different, and so all need to be carefully read and considered. Missing a single “black dot” in a contract is the legal equivalent of missing a single “black dot” on an x-ray.

Additionally, when reviewing a contract, you must also consider what might be “missing” from it, and how what is “missing” might pose a threat to you and your interests.

Many times I have seen seemingly innocuous provisions in agreements that – intentionally or not – change the expressed intentions and effect of the contract.

Here are some common contract provisions that people often mistakenly call “mere boilerplate,” and in doing so endanger themselves and their interests:

• “Section Titles”: This “boilerplate” provision usually – but not always – provides that the headings or titles of paragraphs have no effect in interpretation, but are just there for the sake of convenience. So why read it carefully? Because sometimes the drafter omits the tiny word “no,” and thus changes the entire meaning and effect of the section, to its very opposite, that is, that the section titles are of meaning, and thus need to be considered in interpreting the agreement. If you don’t read the full paragraph carefully, you may misunderstand what the agreement means, leading your mind and your analysis astray.

• “Entire Agreement”: This “boilerplate” provision usually – but not always – provides that only the words inside this agreement count, that nothing outside of it makes any difference. Why is reading this carefully important? Because sometimes other documents are inserted into this paragraph to make it say, for example “The words in this agreement and in the non-compete agreement previously signed by the parties, are and will continue to be binding.” If you failed to see that italicized language, your “boat” may be “sunk” if you get a new job, and your new employer gets a letter alleging you are violating a non-compete agreement. OUCH!!

• “No Unsigned Agreements or Amendments”: This provision, found in many employment agreements, usually says that no oral or unsigned agreements can bind the employer, but only written and signed agreements can do so. Sometimes, though, this is added, without most people noticing: “by the employer’s CFO or CEO.” So, if this agreement, the one that contains this very provision, is not signed by the CFO or CEO, but for example by the Head of HR, then this very agreement – this entire agreement – is not binding at all on the employer. Neat trick, no?

I don’t mean to make you paranoid, and I am not trying to scare you into hiring an attorney every time you have to sign a piece of paper, but I do want to shatter any myth you may have heard or been told, especially by HR, that any words or clauses of any contract can be treated casually.

So, please bear in mind, that when anyone says that “That paragraph is nothing but boilerplate,” or “Most of this agreement is boilerplate,” as soon as you can, you should put on your strongest reading glasses, and carefully read and consider every word of it. And each punctuation mark, too.

Don’t permit yourself to be misled, don’t mislead yourself.
Nor should you “save” five minutes of reading and lose, perhaps, your career, as a result.

Forewarned is forearmed.

Need to send a model memo or letter to make a request or complaint? A good checklist or form agreement? For a complete list of our Model Letters, Memos, Checklists and Sample Agreements, Just [click here.]

Interested in Membership? It’s free, and has advantages, including discounts on our products. Just [click here.]

Need a private telephone consultation? Just [click here.] Evenings and weekends can usually be accommodated.

© 2018 Alan L. Sklover. All Rights Reserved. Commercial Use Strictly Prohibited

Workplace Negotiating Insight No. 16: Make a “Go File” . . . Pleeeeeze

Observe and Learn:

Life is unpredictable, and workplace life is especially unpredictable. You need to be prepared.

You don’t know when you might be laid off, offered a great job elsewhere, or be cut off from access to your office computer.

If anything good, bad or ugly happens to you at work, to protect yourself, your finances and your career, you REALLY need to have at hand a copy of the various written materials that seriously affect you. Otherwise, you will be “in the dark,” and effectively unable to stand up for yourself. At a critical time, being “in the dark” is not good.

What written materials? They include offer letter, employee handbook, bonus agreement, emails in which you were given promises or assurances, retention agreement, employment agreement, stock option award, non-compete agreement, etc., etc.

Trust me: If a real problem occurs, your computer access will be turned off before you know it. And, HR will not provide such materials to you when you most need them. Then you will not be able to negotiate.

And, too, if a prospective employer, recruiter or interviewer asks to see your present agreements, or review your non-compete, if you are unable to provide a copy, you may lose out on a terrific opportunity.

For example, can you start a great new job next month, or have you signed a “Garden Leave” provision in which you promised to give six months of notice when you leave?

So, it’s prudent that, little by little, you take home and keep a copy of all such written materials, and place them all into a “Go File.” Just as “emergency preparedness” authorities recommend people should create a “Go Bag” of valuable papers and prescription meds just in case they need to evacuate their homes without notice in event of fire, flood, etc.

Be wise. Be prudent. Be prepared.
Protect yourself by creating a “Go File.”
Pleeeeeze. You’ll be glad you did.

So many of our clients have failed to do so, and have suffered mightily because they didn’t.

Observe and Learn.
Then Negotiate.

Need to send a memo or letter? A good checklist or form agreement? For a complete list of our Model Letters, Memos, Checklists and Sample Agreements, Just [click here.]

Interested in Membership? It’s free, and has advantages, including discounts on our products. Just [click here.]

Need a private telephone consultation? Just [click here.] Evenings and weekends can usually be accommodated.

© 2018, Alan L. Sklover All Rights Reserved. Commercial Use Prohibited.

It happens to me nearly every day; in fact, it happened to me just last week. When discussing language in a legal document with an employer’s HR or Legal representative, I am told “That is standard language. So, we can’t change it.”

I know why they say that: they are fearful. You see, “long, long ago, in a land far, far away,” some attorney prepared that “standard language,” and this person I am dealing with today is fearful that, if he or she makes a decision to change it today, it could be a mistake. So, it’s easier to use the excuse of “standard language” than to use their brain to address the opportunity, problem and people counting on us to do so.

To get past that, I remind this person of three points: first, this problem is not “standard,” but arose from “substandard” events, so its solution cannot be “standard.” Second, this opportunity is not standard, so the language we need to use is not going to be “standard.” And, third, these people are unique and special, so our efforts on their behalf require unique and special language.

What am I really saying? In essence, “The people you and I represent want this problem to be solved, or this special opportunity achieved. We should try “special” hard to make sure that gets done. They deserve an extra ounce of thought and an extra pound of courage from us . . . otherwise they will not be happy with the outcome . . . or us.”

If you are ever uncomfortable with the “standard language” put in front of you to sign, and are told “It is standard, so we can’t change it,” think of these “non-standard” arguments to overcome such nonsense.

Sure, you should say it “softly,” and sure, you should say it “simply,” and, too, you should say it with “sincerity.” Get past the “standard” argument, and get to the “special” one -the one that works- you and your employer want.

You are not standard, and your employer is neither. Instead you and your employer are worthy of the effort and fortitude that this problem, solution, opportunity and situation need. It’s like buying shoes . . . they’ve got to fit your feet.

This usually works for me, I am confident it will likely work for you, as well.

Observe and Learn.
Then Negotiate.

Need to send a memo or letter? A good checklist or form agreement? For a complete list of our Model Letters, Memos, Checklists and Sample Agreements, Just [click here.]

Interested in Membership? It’s free, and has advantages, including discounts on our products. Just [click here.]

Need a private telephone consultation? Just [click here.]

© 2018, Alan L. Sklover All Rights Reserved. Commercial Use Prohibited.