Offer/”Welcome” Aboard Letters Archives

Key Man / Key Woman Clause – How to Protect Your Key Business Relations

Published on August 14th, 2018 by Alan L. Sklover

“A satisfied customer is the best business strategy of all.”

– Michael LeBoeuf

ACTUAL CASE HISTORIES: Rita was a highly regarded Senior Sales Account Manager for an industrial plumbing supplies company headquartered in Springfield, Illinois that catered to a handful of large construction firms in the Upper Midwest and Canada. Over 20 or so years, she had developed strong client relationships based in a deep trust for her good judgment and for her devotion to client interests. Her clients often said of her “If you need something, and need it ‘yesterday,’ you need to call Rita.” She had also built a small but effective support team around her.

Rita was recruited by a large competitor headquartered in Milwaukee, Wisconsin, to serve in a significant Business Development role, with the expectation that she would bring along her “Book of Business,” that is, her established network of clients and their business. While she was presented with a significant increase in compensation, she was not quite certain it was the right move for her clients, many of whom enjoyed “white glove,” personal treatment they had grown accustomed to over the years.

Wisely, Rita sought ways to protect her “Book of Business,” what some people refer to as her “B.O.B.” She sought one or more ways she could assure her clients and client referral sources that she would “be there for them” whenever and however they needed. She sought, too, a way she could always keep her support team with her.

Her primary concern was that she would join the new company and, in any agreements, somehow lose access to her critical business relations. What might happen if she left the new company, or was asked to leave, for any reason? Like most employers, her prospective employer required their employees sign to a non-compete agreement, prohibiting them from providing services to “the company clients,” which is precisely what “Rita’s clients” would become, if she let that happen.

Rita would also be required to sign a “non-solicit/non-hire” agreement, barring her from taking any members of her support team with her, in the event she left or was asked to leave.

We helped Rita solve these two problems with the use of “Key Man / Key Woman” clauses that her prospective employer reluctantly agreed to, in order to “acquire” Rita, her team, and most especially, her clients. So, if for any reason Rita left the new company, or if for any reason she was not in charge of her clients’ business, Rita’s clients could take their business – and take Rita and her team, too – to another company.

LESSON TO LEARN: As an employee, you are referred to as a “Human Resource.” I happen to deplore that term, as I find it to be a dehumanizing phrase. But, as a “Human Resource” you may be seen as a “source” of new, additional, and very valuable business from new, additional and very valuable clientele. This is precisely why we use “Key Man / Key Woman” clauses and agreements: to offer that to your employer, but to always maintain your access to your “B.O.B.,” and your “B.O.B.”‘s access to you.

Good relations with staff members, colleagues, vendors, customers and clients are of critical value in every business and profession. That is why employers try so hard in numerous ways to ensure that their employees do not “steal” them, even when it was the employee, himself or herself, who brought the client to the employer. It is beyond question that it is in your own best interests to try to keep those valuable business relations, to prevent their “theft” from you, no matter where you are, where you go, or what you do.

Having good, strong, close relations with clients and customers makes you the “rain-maker” that is one of the most important attributes of a successful business person. Having good, strong, close relations with colleagues makes you the “magnet” that can attract, maintain and take with you the best and brightest of talent. Having good, strong, close relations with support staff gives you the ability to move your business to its most fertile location and have intact, when you need it, reliable, trustworthy, confidence-enhancing support.

We see many Key Man / Key Woman clauses in contracts used by sport agents and agents for movie/TV talent. It is not common knowledge, but a good number of senior executives request in their own employment contracts that provide that, if the CEO should depart for any reason, be it voluntary, due to disability or death, or involuntary, due to misconduct reasons or otherwise, they have the option, but not the obligation, to depart free from further obligations and continuing restrictions to the employer.

“Key Man / Key Woman Clauses” are one of the best ways to protect your “key business relations.” And, if you may have the leverage to safeguard your own “key business relations,” why not at least try?

WHAT YOU CAN DO: If you have such key business relations – and so many people do – consider the use of Key Man / Key Woman clauses to protect them. Here are some very valuable pointers:
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Promise Received at Work? Ask These Two Critical Questions

Published on February 13th, 2018 by Alan L. Sklover

“People with good intentions make promises.
People with good character keep them.”

– Author Unknown

ACTUAL CASE HISTORY: Brianna, an Executive Assistant to the Regional Vice President of a major clothing chain, was soon to complete her fifth year of service, all with positive attendance record, positive performance reviews, and positive relations throughout the company. Without her seeking it, one of the company’s vendors made her a job offer with greater compensation and a clear career path to executive level responsibilities.

When Brianna gave her Manager notice of resignation, he pleaded with her to stay, and promised her, in turn, that he would ensure she soon received a very significant ?“retention bonus” totaling almost one half of her full-year salary. With that promise in hand, she politely declined the job offer that had been made to her.

Brianna waited one month, two months, then six months, and the promised retention bonus did not arrive. Finally, she summoned the courage to ask her Manager about it. He said he would look into the matter for her.

About a week later, he told her he had good news, namely, that he confirmed with the company’s Controller that the retention bonus had been officially approved. When it still had not been paid to her after another month, she then received a memo from the Controller’s office apologizing for taking so long to get back to her. The Controller’s memo, though, contained some considerably disappointing news.

First, the retention bonus would be paid, but not for another year “as had been explained to you,” but had not, in fact, ever been discussed. Staying for another year was not something her Manager had ever mentioned.

Second, her retention bonus would be paid to Brianna “if and only if” (1) her next performance review was “exceeds expectations,” (2) the region she worked for met its sales goal for that year, and (3) she assumed additional responsibilities, including extensive travel, that had never been part of her job.

Oh, and one more thing: Brianna’s retention bonus was also conditioned on her agreement to relocate to another city if the company moved her division headquarters during the next year, something that recently had been rumored.
Brianna did not feel at all that she had been treated fairly, not in the least. She decided to seek a position with another employer, as soon as possible, with no looking back this time.

LESSON TO LEARN: What Brianna learned – the hard way – is that, at work, if a promise, assurance or pledge is made to you – whether of a raise, bonus, promotion, stock options or anything else of value – you should instantly ask two critical questions: “When?” and “What are the If’s?” meaning the conditions for receipt.

Nailing down the answers to these two simple questions will greatly increase your chances of receiving what was promised to you, perhaps more than anything else you can ask, say or do.

WHAT YOU CAN DO: At work, If you are offered, promised, assured, pledged or guaranteed anything of value, ask both (1) “When?” and (2) “What, if any, conditions exist on my receiving it?

Ideally, you will develop the habit of asking these two questions, because if you don’t ask them, you just cannot expect anyone else at work to ask, or answer, for you.
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Offer Letter or Company Plan – Which One Governs?

Published on October 10th, 2017 by Alan L. Sklover

“Whoever is careless with the truth in small matters
cannot be trusted with important matters.”

– Albert Einstein

ACTUAL CASE HISTORIES: Case History 1: Joseph signed an Offer Letter that said the following: “The Company will provide you and your family with health insurance coverage, subject to the terms provisions and conditions of the Company Health Insurance Plan.” Sounded good to Joseph.

After starting the job, though, Joseph found out that the terms of the Company Health Insurance Plan provided that “New employees and their families are not eligible for paid health insurance coverage until the employee has been on the job for six months.” So, the “terms and provisions” of the Plan essentially took away what the Offer Letter had seemed to provide Joseph and his family. Big disappointment, to say the least. In this case history, the Plan “overcame” or “superseded” what was in Joseph’s Offer Letter, or at least modified it to his and his family’s significant detriment. Ouch!

Case History 2: When Lemuel started his job, he was very interested in the company’s willingness to offer stock options to its employees. For this reason, he carefully reviewed the terms of his employer’s Stock Option Plan. It said quite clearly that “Company employees will receive a minimum of 1,000 stock options for each twelve months on the job, unless agreed otherwise.” Sounded great to Lemuel.

After a year on the job, Lemuel asked his Human Resources representative if he could get a written statement of how many stock options he had been awarded. To his surprise, he was told “You don’t have any.” When Lemuel insisted on an explanation, she responded, “Your Offer Letter stated clearly ‘Your compensation consists of a base salary, an annual bonus and health care coverage. No other compensation is being offered to you. To receive any additional form of compensation, you and an authorized representative of the Company and you must sign another document that provides that to you.”

So, the “terms and provisions” of Lemuel’s Offer Letter essentially took away what the Stock Option Plan had seemed to provide Lemuel and his family. In this case history, the Offer Letter “overcame” or “superseded” the Company’s Stock Option Plan. Ouch! Big disappointment, to say the least. Seems that the Offer Letter took away what the Stock Option Plan seemed to provide, by “overcoming” or “superseding” what was in the company’s Stock Option Plan.

Does your Offer Letter (or employment agreement) overcome everything that is said in any of the employer’s compensation and benefit Plans? Or do your employer’s compensation and benefit Plans overcome your Offer Letter (or employment agreement)? How can you tell? Perhaps, more importantly, what can you do?

LESSON TO LEARN: If they differ, which one – your offer letter or your employer’s plans – “govern and control?” It all depends, of course, on the wording of the documents – both offer letter and plan – and your willingness to take the time and effort to (a) read them carefully, and (b) ask for clarification, either on your own or, perhaps, with the guidance of an experienced employment attorney.

These days, with employers trying their very best to lower their “employment-related overhead costs,” we are seeing more and more of these issues, and sadly, most often only after someone has lost out on what they deserve.

But you can protect yourself, if only you are willing to try to do so by (i) reading carefully, (ii) thinking carefully and (iii) requesting clarification that even a 10-year old could understand.

That’s what we call wise “navigation and negotiation” of your employment relation, to ensure you get all you deserve, and don’t miss out on anything you do deserve.

Take it from me: unless you act to protect yourself, no one else will, especially your employer.

WHAT YOU CAN DO: Have you received an offer letter, or are you expecting to receive one soon? Do you believe you are entitled to any compensation or benefit that is provided under a company Plan, such as stock, stock options, severance, health care, disability insurance, life insurance, educational benefits, or otherwise? To avoid being deeply disappointed, here are seven things you can – and should – do to protect yourself:
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Know Who Your Employer Is? – You May Be Wrong.

Published on March 22nd, 2017 by Alan L. Sklover

“During the day, I don’t believe in ghosts.
At night, I’m a little bit more open-minded.”

– Author Unknown

Case History #1: Newly Established Entity: George interviewed for a position with a well-known sales and marketing agency headquartered in Italy. After being told he was their first choice candidate, basic terms were successfully negotiated. George was then presented with an Offer Letter to sign, which he forwarded to us for review. His email said, “Looks fine to me. All terms are what was agreed to. I will be opening a U.S. office. Two year commitment. Please look for any legal issues. I resigned my present position yesterday.”

One “legal issue” really troubled us: the name of the “Employer” in the Offer Letter was very similar to the Italy-based company, but it was slightly different. Our internet research revealed that the “Employer” listed in the Offer Letter was not the same employer George thought he would be employed by. Instead, it was a new company, established in the U.S. just two weeks earlier by the Italian company, with no bank account, no assets and no credit. Sure enough, George’s Offer Letter represented far less of a “commitment,” than George had thought.

As we explained to George, at any time it wished, the Italian parent company could decide that the new U.S. company was not meeting expectations, simply close it down, and “walk away.” Should that happen, George would have nowhere to turn for anything he was owed, and his “two year commitment” was in reality no more secure than a mere handshake.

Case History #2 – “Affiliates” Included: After experiencing sexual harassment at her job in the hospitality industry, Danielle filed a complaint with HR, and when she decided to leave, she was offered a severance package. The severance agreement included a provision that Danielle would not disparage or criticize the “company” to others, and the “company” would not disparage or criticize her to “others.” (That last word was key.)

A careful reading of the first line in the severance agreement revealed that the “Employer” was defined as “Colossal Hotels, it parents and its affiliates.” After leaving, Danielle was shocked to find out that many hotel companies she considering working for had received a letter telling them that Danielle had been “requested to leave, immediately if not sooner.”

When we wrote to her former employer, threatening a lawsuit, they responded by sharing with us that the 12 hotel companies that received that letter were all “affiliates” and, thus were all part of the “Employer,” and that none were “others” to whom they were prohibited from disparaging Danielle. The definition of “Employer” permitted them to say anything they wanted, however disparaging, to those 12 companies.

Case History #3 – “Leased” Employee: Jim, an attorney who had been working for a large Philadelphia law firm for nine months, decided to purchase a home. He put down a significant down payment, and submitted a mortgage application. Just days before the closing was scheduled to take place, Jim quite surprised when he was notified that he was rejected for the mortgage loan because the bank was unable to verify his employment.

It turned out that Jim was recruited for his law firm position by a small recruiting agency headquartered in another state, and that “paperwork” he never saw provided that he was technically an employee of the recruiting agency, and not the law firm. He had been told something along these lines at the time, but he didn’t pay much attention to the “details.” Because the recruiting agency had, itself, several times defaulted on loans, and had once even declared bankruptcy, Jim’s mortgage lender viewed his employment as insecure, and chose not to make the mortgage loan to him. Unable to secure the mortgage loan in time to close the house purchase, Jim lost his entire down payment.

LESSON TO LEARN: Far more employees than you might imagine are not aware of exactly who their true employer is, even when the name of that employer is prominently displayed on the front door to the office. For those who are given an Offer Letter or an Employment Agreement, almost always their eyes look at only one thing: how much they are being paid. They don’t look nearly as carefully at who is their “employer.” For those who are not given Offer Letters or Employment Agreements, they are often satisfied by “the name on the door,” or “the name on the stationery.”

Does it really matter? Well, for most people, and in most circumstances, it probably doesn’t. But, it sure did to George, Danielle and Jim. Depending on your circumstances, it may well matter to you, too. It can’t hurt to keep a sharp eye out for who, exactly, it is you work for, and how “Employer” is defined in any document given to you just in case.”

The implications could be huge, including your job security and rights to benefits, compensation, and stock or stock options. It would be a shame if you worked hard for 10 years under the mistaken belief that doing so made you eligible for a pension, only later to find out that you were not truly employed by the company that offers it, and thus you are truly “pension-less.”

WHAT YOU CAN DO: Take the time to consider who it is – or who it may not be – that is your true employer. For example:
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Pay or Play

Published on July 26th, 2016 by Alan L. Sklover

Question: Dear Alan: I was recently hired by a talent agency in Los Angeles as an Assistant to an agent. The offer letter I received says that it’s for one year, and is “Pay or Play.” Can you tell me what that means?

Altadena, California

Answer: Dear Randy: A “Pay or Play” provision is common in the sports, entertainment and media industries, and is becoming more common elsewhere. Even in those industries where it is common, it is often misunderstood.
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Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

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