New Jersey Employment Lawyer Blog

On Friday, April 18, 2008, a New Jersey jury awarded Alfred West $10.5 million in a breach of employment contract claim. Mr. West, a telecommunications entrepreneur, entered into an informally written employment agreement with IDT Corporation. The agreement obligated him to work for IDT for five years in exchange for compensation totaling over $2.5 million per year. IDT failed to pay according to the agreement, and the lawsuit ensued. IDT argued that the agreement was merely "an agreement to agree" and not a binding contract. However, the Court and jury disagreed, finding that all of the elements of a contract were present.

The case highlights the important fact that a legally binding employment contract does not have to be a "boilerplate" legal document. In fact, employment contracts which are written on a napkin, sketched on a blackboard, or even discussed and agreed upon orally, can be legally enforceable, so long as the elements of a contract are present.

I will say, however, that such contracts are harder to enforce and are more likely to lead to litigagtion. I have represented several New Jersey executives in similar matters. These individuals came to me after their contracts were breached, not before. While I have been able to achieve very good results in my contract cases, my clients would have saved a lot of money, time, and aggravation had they consulted me before they signed their agreements. It is very important that both employer and employee fully understand their rights and obligations at the outset of the employment relationship. If the parties have a mutual understanding of the terms of the agreement, and have signed a well-drafted contract, litigation can sometimes be avoided.

I congratulate Mr. West and his excellent attorneys for the sizable verdict. I would expect, however, that Mr. West would have preferred to have been paid his money as an employee, rather than having to go through the extraordinary expense, in both money and time, of a lawsuit.

Posted by Steven Siegler | Permalink | Email This Post

Posted In: Employment Contracts

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Another day, another round of layoffs for the region's workforce. This time its Woolrich, the oldest clothing company and woolen mill in the United States. The Company announced on Tuesday that it is laying off close to 50 garment workers in its Jersey Shore, PA plant due to a drop in demand for its products. It will be offering severance packages to the affected employees who cannot be placed elsewhere in the company.

Employers are not required to give severance pay to their employees. Then why do they do it? There are two main reasons, and neither of them is altruistic. One, they want to give employees a reason to stick around until the plant closes. If an employee quits before the layoff, he or she will generally not be eligible for severance pay. Two, the employers want the employees who are laid off to sign away their right to sue for any and all claims they may have. Once those packages are signed, the employer can breathe a big sigh of relief. It can't be sued by its former employees, for any reason.

Any employee who is offered a severance package should run, not walk, to an attorney who specializes in employment law. Your cousin's friend's brother who handled your house closing or your dog bite case won't do. If you do not work in New Jersey and would like to find a knowledgeable, competent employment attorney, contact my office for a referral or check out the National Employment Lawyers Association at http://www.nela.org. To all of the affected workers at the Woolrich plant, we send our sympathy and wishes for a better future.

Posted by Steven Siegler | Permalink | Email This Post

Posted In: Employment Contracts , Severance Negotiations

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When you receive a severance package from your employer, don’t immediately assume that it’s non-negotiable. You may have more leverage than you know. A skilled and knowledgeable employment attorney can identify where you have leverage and use it to get you more severance pay.

The first and most important thing you need to know is that you already have some leverage to begin with. When your employer offers you a severance package, they are, in essence, asking you to sell away some of your most valuable rights. And believe me, your employer is very motivated to buy this “property” from you. Why are they so motivated? Because if your employer can get you to sign that piece of paper, they can forget about you. You can’t sue them, ever, for anything they did or did not do from the beginning of time to the moment you sign the package. Most of the time, you can’t even complain about them publicly. Some times, they restrict you from working down the street for a competitor. Your right to sue, your vow of silence, your right to compete – the rights you are “selling” have a value. Your employer sets the “buy” price when it puts that severance package in front of you. Before you “sell” your rights away in a severance package, consult an employment lawyer and find out whether the “buy” price your employer is offering is fair.

I’ve had to turn away many potential clients because they didn’t understand the concept of leverage and went ahead and signed their severance package without consulting an attorney. Never, ever, sign something you don’t fully understand. Do the research, find a decent employment attorney, and spend the money for a comprehensive severance package review. Even employees without much leverage in the legal sense can have leverage in other areas, which I will save for a later post.

Posted by Steven Siegler | Permalink | Email This Post

Posted In: Employment Contracts , Non-Compete Agreements , Severance Negotiations

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