What is the meaning of . . .

“Gross Up”?

Everyone is legally permitted to try to avoid taxes – I did not say “evade” taxes – or to pay as little as permissible, in any legal way available to them.

For employees, the most common opportunity to do so is when they incur work-related expenses that may require them to pay taxes on some of the reimbursement.

Examples may include (a) relocation reimbursement, which is now fully taxable to the employee, (b) educational reimbursement that may be partially or fully taxable to the employee, (c) entertainment or travel reimbursement that may be partially or fully taxable to the employee, especially if in excess of certain allowable limits, and (d) automobile expenses.

So, for example, if an employee is asked to move his or her residence for a year or two from Boston to Belgium, moving expenses (for themselves and their family) is considered non-deductible for them, and if the employer reimburses them for that expense, all of the reimbursement is considered income to the employee, who must pay tax on it.

Here’s another example: if your employer asks you to take courses to enhance your work skills, and the cost in one year exceeds $5,200, the excess amount, if reimbursed by your employer, is considered income to you, and you must pay tax on it. There are many other real-life examples, too.

So what’s the solution? Ask your employer to not only reimburse you for the actual expense, but to also pay you the amount you will have to pay in tax on that reimbursement. That is called “Gross Up” for tax purposes, or “Tax Gross Up.”

While it takes a little “gymnastic arithmetic” to figure out exactly how much “Gross Up” payment to you is needed to precisely “Gross Up” tax that you will have to pay, that calculation can be done by your employer, its payroll service, or your own tax advisor.

The reason that it is a bit complicated to calculate “Tax Gross Up” is that the employer should not only (a) pay the additional tax due by the employee, but (b) should also repay the employee for the new tax to be due on the original reimbursement amount, as well.

As an illustration, if the employee incurs a relocation expense of $1,000, and the employer reimburses the employee the $1,000, the employee may have to pay income tax on the $1,000 received of about $300. But wait a minute: then the employee has to pay tax on that $300, as well, which might come to yet more income tax of $90. So, the employer should also “Tax Gross Up” that amount, too. (I told you it was a bit complicated.)

So, whenever a work-related reimbursement is taxable to you as income, or you believe it may be, ask for “Gross Up” for tax purposes, or “Tax Gross Up” as it is also commonly called.

If you do so, there will be more money in your pocket after tax time, and, hey, there’s nothing wrong with that!!

Be aware. Be alert. Look before you leap. That is to say, be “SkloverWorkWise.” You will be VERY GLAD you did.

Incidentally, we offer a Model Memo titled “Request for Tax Gross Up” to send to your employer. Like all of our Model Memos and Letters, it shows you “What to Say . . . and How to Say It.”™ To get yours, [click here.] Delivered in minutes to you by email.

(Please note: This email newsletter does not constitute legal or tax advice; for such advice or counsel, you need to consult a lawyer or tax adviser. In addition, laws change, and that may include the present tax treatments noted above, and, so, reliance upon this email newsletter must take these warnings into account.)

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.]

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“Your Path to Dignity at Work”™

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

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.

What is meant by:

“Work for Hire”?

A “work for hire” (or “work made for hire”) is an item of creative content that was made on the job. Examples include written works, data analyses, visual presentations, songs, computer code and programs, and useful forms and booklets.

If the creation was made during the period of employment, and is related in some way to the job, the law says that it is a “work for hire” and thus owned entirely by the employer.

What happens if you created it before you started your job, but you used it on your job? Chances are your employer will consider it theirs.

What happens if you created it in your spare time, say, on the weekends? Chances are your employer will consider it theirs.

What happens if it was entirely yours, but you shared it with colleagues, and they used it on the job? Chances are your employer will consider it theirs.

Many employers go further, and insist that their employees sign agreements, often as part of their initial offer letters, that provide that even if you conceived of the idea behind the creation, or improved it, while employed, you must agree it is a “work for hire” and “hereby sign over all rights to the employer.”

As an employee, you need to be vigilant. You can take steps to protect your creative works from being considered a “work for hire” and thus lost.

Steps that you can take include, (i) not sharing your creative works during interviews, (ii) being vigilant about anything you sign, (iii) not bringing into the office or uploading your creative works to your employer’s computers, and (iv) not using your creative works in conjunction with your job.

Still further, you can seek a letter, memo or agreement with your prospective or present employers that protects your creative work(s) from being lost or given up.

You don’t need to lose your rights to your creative works, writings, and inventions. And, you definitely don’t need disputes, lawsuits or legal fees.

You do need to be careful. There is a fierce competition for great ideas, and the valuable creations that come from them.

Forewarned is forearmed.

More information on Protecting Your Creations can be found [here].

For a Model Letter requesting Rights in Your Creations on Your Present Job, just [Click Here.]

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 and Strictly Enforced.

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

What is the meaning of:

“Incorporated by Reference”?

In many workplace agreements, we see language that says something like this:
“This Agreement and the Confidentiality Agreement signed on November 24, 2021, which is hereby incorporated by reference, constitute the entire understanding between the parties.“

In this way, two agreements —one “new,” and one “old”— are combined into one. The simple phrase “incorporated by reference” makes it necessary to review not only the “new” agreement in your hand, but also the “old” agreement (or agreements) now being incorporated into it, which you may have signed decades ago.

So, for example, if you are given a Severance Agreement, and it “incorporates by reference” a Non-Competition Agreement you signed on your first day of work nine years ago, without realizing it, you may again be agreeing to a Non-Compete restriction that may not make sense now.

“Old” agreements may have made sense to sign then, but may not make sense to sign again, now.

Also, years ago you may not have had sufficient leverage to refuse to sign that “old agreement,” but you may now have sufficient leverage to refuse to re-sign it.

As another example, if you are given a new and seemingly generous Bonus Agreement, and it “incorporates by reference” a Reimbursement Agreement you signed six years ago, it’s just possible that that “new” bonus may just not be worth it.

In a nutshell, keep an eye out for the phrase “incorporated by reference,” and if you see it, review each of the other agreements it combines by “incorporating by reference.” Say to yourself, “Is this a wise thing to do?” Frequently, the answer is “No.”

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