As a Vice President Ecommerce executive recruiter, I can tell you that employment contracts are the exception rather than the rule for most VP-level digital marketing and ecommerce leadership positions. But I just had an employer tell a candidate to expect one. This particular candidate has never had an executive-level contract like this in the past- only offer letters- and he wants to know what to expect. I’ve negotiated lots of them. Here is my short list of some key areas that all candidates should be aware of, should you ever find yourself on the receiving end of an employment agreement:
-Basic job information including title, supervisor’s title, start date, compensation (salary, bonus, deferred comp, retirement contributions, equity, etc), benefits, time off, sick days, vacation, any other benefits and perks. The details of the position itself are often spelled out in an appendix to the contract.
-Employee classification- 1099, or W2.
– Confidentiality agreements, or NDA’S. The candidate promises not to share any information on secrets, processes, formulas, data, or even how business is conducted.
-Non-compete agreement. The candidate agrees not to work for any competing company, engage in any business that competes with the employer, or steal any of the employer’s customers for a specified period of time after employment ends.
-Ownership of patents and inventions. Any work that was prepared by an employee in the scope of his or her employment is the property of the employer.
-Exclusivity. The candidate agrees that they will not work for any other company in the same or similar type of business during the term of the contract.
-No additional compensation. The employee is not entitled to any additional compensation should they become elected as an officer.
-Termination. Involuntary termination without cause should include a severance provision. A “good reason” clause will allow an executive to resign and still be entitled to severance pay. A “change of control” provision can be added, which provides specific payments and/or benefits to the employee if the company is purchased or even changes majority ownership.
-Notice and Cure. Essentially, this requires the employer to provide written notice of its grounds for termination to the executive, and then allow the executive a period of time, usually 30 days, to “cure” the problem.
-Arbitration. The employee agrees to use arbitration or mediation to resolve any issues with employer, rather than going to court.
-Choice of law. The agreement asserts that should any dispute ever arise in a lawsuit, it will be governed by the laws of a particular state, regardless of where it is filed.
This is by no means an exclusive list. When I tell people that during 30 years as a Vice President Ecommerce executive recruiter I’ve seen it all, I’m not kidding. I remember placing a CDO some years back, and in his contract was a provision that actually governed the candidate’s activities outside the office. You see, on weekends during the summer he went around the state competing in demolition derbys at county fairs. The employer saw pictures of his car crushed to a pulp on his Facebook page. Fearing that he might suffer a debilitating injury that could affect his ability to work, the client inserted language to cease and desist all such activity during the length of his employment. He was cool with it because this was his dream job. I once handled an employment contract that was more than 30 pages long, and I needed to hire a labor contract attorney, in addition to consulting with my candidate’s own attorney, to make sure we understood all the legalese. But this will give you a basic overview of most of the major categories that are covered in these agreements. I would welcome any comments from those of you who have had employment contracts in the past, and perhaps share any other unusual provisions that you might have encountered.