Breach of Employment Contract
Although many employment relationships are at will, numerous others are not, particularly those involving highly skilled employment or relationships involving employees who helped get a new company off the ground. Our firm has had extensive experience reviewing these contracts at different stages of the employment relationship. We have represented corporate officers such as Chief Operations Officers, Vice Presidents of Marketing and Development Engineers, who started, developed, or nurtured a company through giant growth stages. Then for whatever reason, the company and that employee realized that they were traveling on different paths. Perhaps the employee wanted to take his skills elsewhere or wanted to start a spin off. Navigating these monumental career shifts can be very tricky.
For one thing, many of these contracts involve stock transfers or promises for stock options. This is quite common because as companies expand, they require capital investment. Cash flow can be tight through these expansions and to keep key employees motivated to work around the clock, they have to sell those employees on the company’s future. To do that, companies make these promises to deliver stock or options.
There are many legal considerations regarding whether these promises are legally binding. A typical provision in the employment contract may not spell out the specific number of shares or options promised, or the promise of these shares occurred after the employment agreement was signed. Almost all of these agreements will require that both parties sign an amended employment agreement for any changes in the benefits or wages of the employee. There are legal issues pertaining to whether email communications between the employer and employee after the employment agreement’s signing constitute such signed amendment.
Another issue involving the promise of stock or stock options involve whether there was legal consideration given by the employee in exchange for the promise made by the company. Meaning if you the employee, were already under an agreement to provide services to the company, then the company offered the shares as an incentive; if the employee didn’t have to provide any additional service to the company for that promise, the Courts can view that promise as an unenforceable gratuity, rather than contract breach.
A further issue involves the valuation of such shares or options. For example, let’s say the company offered you the employee, 100,000 shares two years ago and never delivered them. At the time of the offer, the shares were valued at $10 per share. In an effort to raise capital, the company then issued another 2,000,000 shares, thereby diluting the value of the promised shares. In addition, over the two year period since the promise was made, market conditions also influenced the share price. Is the employee entitled to the shares at the original $10 value or is the employee stuck with a lower price per share?
Hundreds of thousands to millions of dollars can be at stake. We’ve litigated employment contract breaches involving these very issues. Let our experience in navigating these waters help you through your career path.
"I was a regional manager earning six figures with a top data content delivery company. I was wrongfully terminated and not offered a severance package. Morris E. Fischer's office handled by case exceptionally well. If you are a top level executive, I would definitely recommend this office for your employment situation."
Mount Airy, MD
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Dave Bennett, Fort Lauderdale, Florida
I recently transitioned from one employer to another. I hired Morris E. Fischer, Esq. to examine both my contract with my previous employer, as well as give me guidance prior to signing a contract with my current employer. Mr. Fischer provided excellent counsel in regards to my contractual agreements and the legality of bringing previous clients to my present company. I highly recommend Morris E. Fischer, Esq.; he provides assurance during an uncertain time.
By request, client's name is withheld for on-line publication. Individuals with a similar case seeking a reference will be given the client's name and contact information.