Drafting Employment Agreements to Address Bad Behavior

Efforts to reduce the incidence of workplace sexual harassment and identify and punish wrongdoers have increased significantly. Defining consequential misconduct is an important part of drafting a “for cause” termination clause.

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• Clawback Policy Design and Tax Issues
  See how clawbacks are a common feature in private and public company incentive compensation arrangements and often appear as clauses within an employment agreement or incentive compensation award or agreement. The clawback is meant to penalize an executive for misbehavior, including activity that has resulted in a misrepresentation of financial statements, on which the amount of incentive compensation was determined.
• Incentive Compensation: Clawback Provisions
  Review the provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 which require the forfeiture of compensation received by executive officers of public companies in connection with the restatement of financial statements.
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  Review tips regarding the negotiation and drafting of executive employment agreements from the perspective of the employer. Employment agreements are common for top executives at both privately held and publicly traded companies.

Practical Guidance Updates

Featuring the latest updates from your Practical Guidance account.   

• Employee Benefits & Executive Compensation Key Legal Developments Tracker
  Stay informed on new developments.
  • ERISA. DOL issues supplement to June 3, 2020, Information Letter on private equity investments in ERISA retirement plans, cautioning that plan fiduciaries must have or obtain sufficient expertise for their prudent selection and monitoring, and echoing commentator concerns over their propriety as a DC plan investment option. DOL, Supplemental Statement; DOL Warns Retirement Managers About Private Equity’s Risks.
  • Health and Welfare Plans / Fringe Benefit and Other Welfare Plans. IRS notifies taxpayers regarding the standard mileage rates to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving purposes in 2022. The standard mileage rate for transportation or travel expenses rises to 58.5 cents per mile for all miles of business use (i.e., the business standard mileage rate).R.S. Notice 2022-03.
  • Employment, Independent Contractor, and Severance Arrangements. McDonald’s claws back $105 million in severance pay from former McDonald’s chief executive, whose employment was terminated in 2019 for having an inappropriate relationship with a subordinate. See Fired McDonald’s CEO Gives Back $105M to End Lawsuit; McDonald’s Sues Ex-CEO Over Alleged Workplace Affairs.
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• Check out the new Practical Guidance Author Center! Learn about the 1500+ leading attorney authors contributing to our 20 practice areas, and find out how you can Become a Practical Guidance Author.
• The Practical Guidance Journal Fall 2021 Edition features Environmental, Social, and Governance guidance.
• New Practical Guidance Content
  • Notice 2022-03: Standard Mileage Rates for 2022
  • States Seek to Rein in Rx Costs and Pharmacy Benefit Managers
  • Here I Go Again in the Plan…Treatment of Rehired Employees
  • HHS Adjusts 2021 HIPAA, Certain ACA and MSP Monetary Penalties
  • Market Trends 2017-2021: Post-employment Restrictive Covenants

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