Published on July 14th, 2012 by Alan L Sklover
Question: What are the employees’ heirs’ responsibilities if he dies, and there is a “successors-and-assigns clause?”
If an employment contract for a pilot says that the agreement inures to his heirs, would the company be obligated to employ the heirs as pilots? That can’t be right, but that is the objection to this clause that I am hearing.
Answer: Dear Citation Pilot: The objection you are hearing has no basis. And, it is easily remedied.
1. An employment contract is a contract for personal services, and the “personal services” part of the contract cannot be assumed by heirs. As I often say, the law is essentially comprised of common sense, handed down from one generation to the next, slowly but surely adapted to the changes in society. In the law, a contract for personal services – which is what an employment contract is – can have a valid and enforceable “successors and assigns” clause, but the personal services part is not part of it. Your situation, that of a pilot whose heirs may not be good pilots, or pilots at all, is a perfect example. It is the same for all personal services.
2. With a successors and assigns clause in an employment contract, the employee’s heirs would be entitled to the economic benefits, and responsible for the economic burdens, which are not “personal” to the employee. If, say, the employee passed away on a Thursday, and had already worked Monday, Tuesday and Wednesday, then the employee’s heirs would be entitled to (a) his or her salary for the days worked, as well as any other monies previously earned but not paid, such as (b) commissions, (c) quarterly bonuses for previous calendar quarters, (d) stock awarded and vested, (e) business expenses incurred but not yet reimbursed, and, depending on the state in which the employee worked, (f) accrued but unused vacation pay.
On the other hand, if the employee passed away on a Thursday, and the employee had already been paid for the entire week, then the heirs would be responsible to return to the employer (a) the two days of pay not earned, as well as such things as (b) any company property at the employee’s home (cell phone, computer and car), (c) outstanding loans or advances in pay given to the employee, (d) accidental overpayments made to the employee, (e) any monies the employee may have embezzled.
3. Here, “heirs” does not mean the “heirs, personally,” but the “estate of the deceased employee,” which is later distributed to the heirs. When a person passes away, all of their assets and all of their debts are considered their “estate” and if the sum total is “in the positive,” it is then distributed to their heirs according to the person’s Will or, if no Will exists, according to the family members in a certain order determined by the law of each state. Please understand that the heirs are not “personally” entitled to the monies due the employee, and the heirs are not “personally” obligated to return overpayments. Instead, these monies – owed or to be repaid – are due to the employee’s estate, and from the employee’s estate, which, if any balance is left over, is then distributed to the heirs.
5. Here is a quick and easy solution to your issue, requiring just four new words. Sometimes, being a little clearer in words calms people down, and enables the parties to move forward. While I don’t think it is necessary from a legal point of view, how about proposing this quick and easy fix to the problem. While the usual successors and assigns clause says “This contract shall be binding upon and inure to the benefit of the employer’s and employee’s respective successors, assigns and heirs,” just modify the language slightly by inserting four little words, to “The financial aspects of” in the front of the sentence, so it reads “The financial aspects of this contract shall be binding upon and inure to the benefit of the employer’s and employee’s respective successors, assigns and heirs.”
I hope – and expect – this helps you understand this legal “glitch,” and how easily the use of common sense and a few words can so often get employers and employees what each of them – usually – truly wants: to work together on a fair basis.
Thanks for writing in, and hope this gets you “off the ground.”
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© 2012 Alan L. Sklover, All Rights Reserved.