The best time to engage an attorney is BEFORE you start the job
September 15, 2015
By James W. Carroll, Jr. Esquire
It is not unusual for an executive or professional employee to engage an attorney at the time he or she is terminated from employment. It far less common for such employees to engage counsel at the time they are hired. Unfortunately, those choices are basically backwards.
The first thing an employment lawyer will look at when he or she is being consulted by an employee who has been recently terminated is their Employment Agreement or Offer Letter. Those documents largely describe the terms and conditions of an employee’s position, compensation and rights at termination. Unfortunately, if an employee was not careful about negotiating the terms of their employment, their ability to negotiate a favorable conclusion of that employment may be extremely limited.
For example, it is vital that an employee on accepting employment understands the circumstances under which he or she may be terminated. In the absence of a clear agreement (in writing, if possible) to the contrary, all employees are at-will. That means that an employer can fire an employee for good reasons, bad reasons or no reasons at all. While this may be a small problem for an hourly employee in a position not requiring specific skills, it can be very difficult for an employee who is in a position requiring specific skills and expertise where compensation is substantial.
The classic example of these concerns would be a high level employee who is recruited by a distant employer who will require, in order for the employment to be accepted, that the employee relocate, move his/her family, sell and buy real estate and enroll any children in a new school system. These changes can make sense if the new job is a good fit and long term. However, if the new job does not work out, especially if there no fault on the part of the employee, those changes can result in an employee being unemployed, in a strange location without any support systems and no severance payments from the new the employer.
Frequently, a new employer, who is anxious to bring on board an employee with substantial skills and experience, will be willing to negotiate favorable terms in the event of a termination. The kinds of terms that would be very beneficial would include a substantial term of severance (at least one year), an agreement to pay the closing costs on the house bought in the new location as well as the closing costs on a house in a subsequent location, as well as reimbursement for relocation. Sometimes new employers are willing to offset losses in salary or bonus from the former employment by promising the new employee will receive stock awards or other payments over time. Unfortunately, sometimes the new employment does not last until the point in time when those payments will be made. Obviously, it would be important to negotiate any such payments either be made immediately or, if over time, made at the time the employee is terminated.
There is a limited body of case law in Pennsylvania where Courts have found “implied contracts” to address the extreme forms of these situations. The case of Cash-dollar v. Mercy Hospital of Pittsburgh, 406 Pa. Super. 606, 595 A.2d 70 (1991) is an example of where an employee who was recruited and relocated was employed for a short time (sixteen days), terminated seemingly on a whim, and filed suit. There the jury made a substantial award under the theory that there was an “implied contract” for a reasonable period of employment. Unfortunately, as this line of cases has evolved, Courts have been reluctant to find “implied contracts” except in the most extreme situations. Therefore, this theory is generally not helpful to most employees.
© 2015 Rothman Gordon, P.C. The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.