A dirty little secret of Silicon Valley companies is the hiring of leased employees and contract employees, subject to non-competes / non-employment restrictions by their primary “vendor” employers.
The BATNA of Severance Negotiation
The Best Alternative to a Negotiated Agreement in the context of severance negotiations has a speculative value for both parties, and this fact presents an opportunity for leveraging and interest positioning.
Politics, Freedom of Speech, and the Workplace
In a 2012 article humorously titled “Where Free Speech Goes to Die: The Workplace” Bloomberg writer Michael Dolgow correctly noted there is no First Amendment right to free speech in private employment scenario.
Two Weeks Notice & HR Myths
If you been employed this last decade you likely have seen through several human resources myths, like “Employees are our most important assets”, and “Our Code of Conduct requires honesty and professionalism by all members of management”.
Benchmarking Severance [proceed with caution]
Industry practice surveys can be dangerous as bench-marking and strategy assessment tools. They are by nature rear view mirror looking, exclusive to the target market of the surveying consulting firm, and present a rather narrow view of broad industry practices and trends.
Exits & Severance: Top Ten Negotiating Blunders
I am not recommending a Do It Yourself approach to exit packages and severance negotiations, but I am hardly suggesting that the reader isn’t smart and savvy enough to represent themselves adequately, perhaps superbly.
Severance Negotiation’s 7 Deadly Sins
As an employment lawyer who has worked with 100s of client in negotiating their separation package and improving severance pay, and consulting with 100s of others that have taken a do-it-yourself approach, I see many examples of bad negotiation thinking and attitudes.
Workplace Bullies & Harassing Managers
"Anyone who has suffered harassment by managers and co-workers knows how negatively it affects the quality of the employment relationship – often turning the workplace into a "hostile work environment." These behaviors can turn a dream job into a waking nightmare. Some forms of harassment, discrimination, and retaliation are illegal, but others are simply not legal issues with an obvious remedy."
Job or Career; Does it Matter?
In my experience careers were noted by their linear progression: there is a beginning, middle and end. You progressed as a naive learner, accomplished performer, to becoming a senior authority and/or resource. Jobs on the other hand a have a static quality, you are essentially the same resource to the employer on day 5000 as you were on day 1.
Thomas C. Walker, Esq.
These attitudes, or “sins”, are natural expressions of a sense of frustration with unfair treatment at time of employment termination, but they are predictively destructive to any healthy negotiating process about getting better severance.
If you are considering negotiating with your current or former employer, ask yourself if you are projecting any of these attitudes as a key component of your message:
Anger: Picking a fight, making harsh allegations about your company, human resources group, managers, co-workers, etc. Fighting words are not rewarded with better terms.
Gluttony: Asking for too many things, over-indulgence in your list of asks for you to be satisfied. The complexity and length of your demands needs to be disciplined and constrained.
Lust for Revenge: Expecting executives, managers, co-workers, to be disciplined / fired in order to satisfy you. You can’t change the employer, don’t try.
Greed: Asking for too much, overstating what you believe to be fair. In all negotiations there are limits to what the other party will genuinely consider; being unreasonable ends the discussion.
Envy: Basing your negotiating position on what other terminating employees may have received in the past. The employer has a right to change prior practices, and treat people differently; telling them that they don’t have this right is just picking a fight.
Pride: Arguing that you were the best employee imaginable, that the decision to terminate your employment was clearly wrong. You can’t win this argument.
Sloth: Waiting until the last moment and/or making a weak effort to present your proposal for a better separation package. Your timing and energy matters.
Ready to negotiate and you’ve decided to do it yourself? Check your attitude, you won’t get a second chance.
These contract employees are prohibited from quitting to join certain named employers, and these restrictions often last for a year or more after their termination of employment from the vendor.
How can this be possible, California abhors non-compete type restrictions, right? It is possible because clever out-of-state headquartered employers and attorneys have drafted employment contracts subjecting employees to legal venue and forums outside of California. In other words, violate the agreement, find yourself served with a lawsuit for breach of contract filed in Texas, New Jersey, etc. But you can legally declare these contracts to be void in California, right? In the last few years you were likely to get the legal advice to get out your checkbook and hunker down for a protracted legal battle.
Thanks to SB 1241, signed into law as Labor Code Section 925 by Governor Brown in 2016, these forum shifting clauses are voidable for contracts entered into, modified, or extended on or after January 1, 2017, as a condition of employment. In the new year, California law may prevent enforcement of new out-of-state non-competes and clauses that require the employee be subject to the courts or arbitration of non-California forums.
Great news, but note: There are fine points, exceptions and ambiguities in this brand new law. Be sure to run your scenario past a competent legal professional before committing to a course of action.
Ask an employee that truthfully answered an HR survey about his manager’s performance and ethics, and then found themselves on a performance improvement plan.
I suppose the classic scenario is an enthusiastic employee advocating for some political agenda or candidate. “Hey, I was just exercising my right to free speech!” No, you were painting a target on your back. Ask former Mozilla CEO Brendan Eich who resigned following disclosure and backlash for his support of Prop 8.
However, in California the employer’s conduct does come under some protective regulation. It is unlawful for an employer to force your allegiance or speech to conform to a political or social agenda, and it is unlawful for en employer to prevent you from engaging in political activities (on your own time) or retaliating against you because of your outside of work participation. California Labor Section 1101 & 1103 prohibit coercion, influence, controlling or retaliation in the area of employee’s political beliefs or activities. However, this is not the same as “free speech” in the workplace, so don’t bring your political advocacy to work.
Speaking of advocacy, some types of advocacy might be protected advocacy because its nature is closely related to an acknowledged protected class or protected activity, Advocating LBGT rights in the workplace might be a fair example, the EEOC & DFEH are willing to hear your complaint that you suffered management retaliation for expressing your views on what is a statutory protected civil rights matter in California.
Common sense, keep your political views to yourself in the workplace. The freedoms you enjoy as a U.S. citizen do not necessarily follow you into your employment relationship
For the employer, a failed severance negotiation means not paying money & other benefits; but it also means not acquiring the (former) employees promises and releases, or perhaps not acquiring a resignation decision by a problem employee. But, employers value predictability and control, and a walk-away BATNA provides neither. They’ll have to wait for the next shoe to drop and suffer some disorganization from an abrupt departure.
The walk-away BATNA for the employee is freedom to file a lawsuit, make an agency complaint, engage in lawful disparagement in social media, perhaps influence future business that might come to that employer. If still employed, it may be an opportunity to ride it out as a disaffected employee while searching for other opportunities. But, employees value new economic rewards, and a walk-away BATNA promises no immediate pay-off. Revenge does not buy groceries, and it has a habit of blowing back.
If the employer is informed of what their walk-away BATNA looks like in comparison to the upside of a mutual agreement delivering predictability, control and continuity at time of separation, the employee gains valuable leverage. If the proposal addresses these underlying concerns and interests of the employer, then this leverage pays off.
As a California based employee, here are a few things for you to consider:
Notice to management that you intend to leave may cause the employer to terminate your employment immediately. Although they may pay you for those two weeks, they likely don’t have to and many times they won’t. If the employee handbook discusses two weeks notice and gives you the clear impression your employment will continue for those two weeks – you have an argument to get paid. The risk is you are out of two week’s pay you were expecting, and in some companies your benefits will terminate immediately.
Those two weeks can be painful. You may find yourself shut-off from internal systems, your company cell phone and voicemail might be blocked. You might be given restrictions on talking to clients/customers, and even your company friends. And, you may not like what they ask you to do during those two weeks.
Since you haven’t started working for another company as yet, you can bet there is going to be a good deal of curiosity and questions about where you are going to work and what you will be doing. If you are planning on starting work with a competitor you can bet this will get uncomfortable, and in the worst scenarios you might sense a desire to sabotage your transition.
On the other hand, The company may offer special benefits if employees give the requested notice, or there is some program with unaccrued/unvested pay that will vest and be paid to you if give the requisite notice. These are rare, but not unheard of – check it out.
Perhaps you have the opportunity to negotiate the rules of engagement and benefits of staying those two weeks. And, perhaps you are betting on a positive afterglow, favorable reference letters and other reputation considerations is making the decision to give advance notice. Maybe you are giving notice because you simply believe it’s the right thing to do.
The point of this post is that two weeks notice is something for you might elect to do for tangible and intangible reasons, understanding the risks you are taking. It is not a valid employment doctrine.
One that persists is the requirement to give two weeks notice at time of resignation. Really? And, how does that square with an employer’s favorite doctrine of “at will” employment?
Nonetheless, these excellent organizations have offered these survey summaries, (some may require download), and knowledge is power. Everyone likes to make comparisons. Again, these tend to be larger employers who were invited to participate by top tier organizations in year’s past. It is unlikely that your employer, or an employer like yours, was surveyed:
But, even the best negotiator may suffer from a lack of direct experience in this unique event, (and a third party perspective as an exiting employee), jumping into their own severance negotiations. If you are going to negotiate for your exit and your package, here is a discussion of what I think are the most common negotiating dysfunctions current & former employees suffer in getting their desired deal from their employer:
Demanding Immediacy: Pushing for too much too soon is a huge mistake. Some try to do it in the exit interview or the day of their separation. And, they demand immediate answers. Well, they often get one and the answer is no. This is a process; anything done quickly, without pre-thought or preparation, invites the quick answer.
Verbal Negotiation: This informal mode of communicating your negotiating position invites thoughtless responses, and ones that are off the record. If you do achieve progress there is no record of promises made. It often results in disappointing outcomes after you think you had the deal made.
Polarizing Anger: Passion is positive, and so is emotion. But if it spills into a dialogue filled with anger the parties are more likely to engage in fight or flight behaviors. Game over.
Collateral Issues: Sure, there is a lot you could talk about, but to the extent your arguments and justification stray from matter at hand so will the response. The fact that there have been a variety of bad behaviors you’ve witnessed during your employment relationship does not normally justify what you are asking for now.
Out Of Bounds: Asking for too much, or something employers just don’t give, undermines your credibility and causes the company to simply walk away. You need to be credible and your proposals need to have business practicality.
Revenge & Justice: Expecting to change people, the company, or who’s allowed to stay in charge, is a waste of your energy and runs into the problems discussed above.
Litigating Your History: You are not trying to win an argument, you are working toward a negotiated resolution. They are never going to agree to your version of past events, keep the focus on present and future.
Legal Threats: Threatening legal action will move your negotiating forum to legal counsel’s office, and that will likely be the end of any effort to arrive at a good faith business resolution.
Tunnel Vision: Severance pay might be the light at the end of the tunnel, but your package has a dozen other features – some of which have serious monetary or reputation value. You are trying to negotiate a package with several moving parts, not one benefit.
“God is in the details”: As the architect pointed out, things might look good from afar, but you need to be rigorous and detailed oriented in reviewing all the components. There is a reason these separation and release agreements are 4, 8, 15 pages. What are they promising, and what aren’t they promising, and how will it affect your behaviors and afterglow in the future?
Final thought: Don’t start proposing your ideas too soon and while mentally and/or emotionally unbalanced. It is my experience that there is good reason to pull back and clear yourself of the debris of the employment relationship. You have to go through the change in your identity from disaffected employee to advocate for the favorable business resolution. Your state of mind and emotional balance will influence everything.
So starts my Avvo article about hostile work environments and bullying, but this is what I really think ....
Courageous California, leading the nation in "employee friendly" laws, has recently passed anti-trafficking laws requiring posters to be displayed in various workplaces. I think this is a fine idea, and I am not insensitive to the horror and number of victims estimated to by the established task forces in the State of California.
But what about workplace bullying? Sources claim up to one-third of employees in U.S. workplaces are subject to bullying and one-fifth of those circumstances escalates to direct harassment. Why doesn't our courageous State jump out front and require anti-bullying posters in the workplace and penalties for employers who tolerate toxic work environments?
I know why, and I bet you do too.
Until then, California plaintiff employment lawyers wiill attempt to take up this slack by finding creative ways to hold employers accountable for injuries suffered by employees which are totally unrelated to the work at hand and not part of the employment bargain. Of course, these attorneys will be referred to as sleazy shake-down artists, much like the campaign against unfair business practice lawsuits in California.
Worth supporting: the Healthy Workplace MovementHERE
As I got a little older, wiser perhaps, the distinction fell away for me. Employers are often so big, the availability of talent so apparently plentiful and corporate needs so ephemeral that the modern career sure seems more commoditized and job-like than career-like. The linear progression is often illusionary, or temporary.
When these career qualities matter and need to be spoken boldly is in the context of negotiating with an employer; at the beginning, middle and end of a career. Loyalty, security, experience, duration, talent, meaning, knowledge-work, commitment, ambition...all of these qualities are part of the value package and represent leverage an employee brings to the table in trade for the rights, compensation, benefits and privileges of a particular employment relationship..or a release from one's history.
However, it's also worth remembering that these qualities are not recognized under our laws as transmuting a career employment relationship into anything more than a mere job. Unless there is a clear contractual promise between the employer and employer that a career means something more than "at will" employment, the career employee is assumed to have the job security of a minimum wage worker. This is a rude awakening to many "career" professionals. Crazy bosses, mobbing subordinates, sly politics and favoritism, false evaluations and general dirty pool and improper motives are not workable legal claims for a wrongful termination scenario...without something more. Don't be fooled otherwise.
As our California Supreme Court announced in Guz * so clearly: '[T]he courts have not deemed it to be their function, in the absence of contractual, statutory or public policy considerations, to compel a person to accept or retain another in his employ, nor to compel any person against his will to remain in the employ of another. Indeed, they have consistently held that in such a confidential relationship, the privilege [to terminate] is absolute, and the presence of ill will or improper motive will not destroy it.' (9 Williston on Contracts [(3d ed. 1957)] § 1017, p. 134.)" [emphasis added].
*Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317 , 100 Cal.Rptr.2d 352; 8 P.3d 1089, FN. 8
Title, Duties, Location: If you are joining as a senior manager, vice president, account executive, etc., the offer letter should say so. Where exactly will you be working, and who will you be reporting to? This covers a good 80% of the complaints I hear from employees who feel they were victims of a bait and switch.
Ask for Attachments: Commission Plans, Proprietary Information Agreements, Incentive Plans, etc. are referenced in the offer letter but seem so show up weeks and months later. Big surprise, the commission or incentive plan doesn’t seem to match what you were told when you were being recruited.
Restrictive Covenants: If you see references to non-competes, non-solicitation, about working for this client or customer post-termination, etc., you should consider these red flags. They want to control your career post-employment.
Bonus & Salary Review: It is not that uncommon to brought in at a high salary that you negotiated, later to find you are effectively frozen for bonuses and salary review, perhaps for years. If you expect to be consider for bonus and salary review after a year or sooner, the offer letter should say so.
Vacation & PTO: Few think about negotiating vacation days, it seems seedy to push for benefits during the pre-boarding stage. But, many find out that that there co-workers did ask for double the standard vacation accrual the first year, and got it – reason being they were given up that time off in the company that they left.
Protections: This subject moves into a more advanced level of pre-boarding negotiation but there is little doubt that guaranteed severance, change of control vesting, triggers which wipe-out obligations for repaying signing bonuses and relocation reimbursement – these protection clauses could save you many thousands of dollars if things go bad.
Lots of talk about offer letters; are they contracts, are they terminable at will, do they force you to arbitrate claims, etc.? Practically, these are the more likely problems you might be on the look-out for:
Are 'No ReHire' Provisions Valid?
They started showing up in separation agreements over a decade ago.
“Employee agrees they are not eligible for rehire with the company, its subsidiaries and affiliates..” In the minds of many former employees this was highly objectionable, because once the current mob of managers was gone the employee might like the idea of coming back to the company.
Our California Ct. of Appeals, Golden v. California Emergency Physicians Med. Group, 896 F.3d 1018 (9th Cir. 2018), recently addressed this question on behalf of a physician that objected to a settlement agreement with his employer-hospital that prevented him from rehire by the employer, hiring by other companies that it managed, or being employed with companies it did business with.
The court held the no rehire provision is valid for the employer or companies that it owns or manages, but that’s about how far the prohibition might go:
“.. to the extent that it provides that Dr. Golden "shall not be entitled" to work at any other facility owned or managed by CEP, it simply restates the obvious proposition that an employee does not have a general right to work for an employer without the employer's consent…”
If the prohibition goes beyond rehire at the 'company', it is unlawful:
“In sum, the text of section 16600, the California courts' interpretation of that text, and the statute's underlying legislative policy together persuade us that the statute applies to any professional restraint that substantially—i.e., significantly or materially—restrains a person's lawful profession, trade, or business.”