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Be careful with wording in Employment Agreement   
October 28, 2020
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Be careful with wording in Employment Agreement
            While the Employment Agreement contains many “printed” provisions [yes, including restrictive anti-competitive provisions – which we customize state by state] there are many areas that require “fill-in”.  For example, the information regarding the employee’s position, scope of duties, benefits and compensation needs to be filled in.  You need to be careful how you fill in the Employment Agreement “blank” spaces that require fill in.  
            How do you think this salary provision should be interpreted?  I ask because it was the issue in a lawsuit where the lower court ruled one way and the appellate court reversed, ruling the other way.  You may wonder how the heck this language could possibly be the subject of a lawsuit, and worse, an appeal where the ruling gets reversed.  It reminds me of the not so funny joke, “What do you call a lawyer with a double digit IQ?”  The answer is below.  First, here’s the salary provision:
            “Company will pay Employee as compensation for his services, in equal bi-weekly installments during the 5 year term, the sum of $50,000.00 (the Base Salary), less such deductions as shall be required to be withheld by applicable law and regulations”
            The Employee sued the Company for breach of contract for unpaid salary.  [there is no mention in the reported decision whether the employment was over or continuing, but I am sure we can assume it was over and it was a “former employee” suing]
            The Employee contended that he was entitled to $50,000 every two weeks.  The Company contended that the $50,000 was an annual salary to be paid over 26 week period in equal amounts.  
            The lower court [and lower just means a trial level judge – this is not small claims or court of limited jurisdiction] ruled for the Employee.  Now in all fairness, the decision doesn’t mention what level employee is involved, so you can’t let that influence your judgment.  The interpretation of the salary provision is a “legal” matter, requiring a judge to determine what the provision means.  So the lower court ruled that the employee was entitled to $1,300,000.00 for the year.  
            The appellate court reversed and found that the salary provision could be read in only one reasonable way, to support an annual salary of $50,000.00.  The appellate court found that if the Employee was to be paid $50,000 every two weeks, instead of annually, then there would be no need to mention that each payment was to be “equal” or that the salary was to be paid in “installments”.
            When you draft a contract you must learn to use precise words so that the meaning leaves no room for disagreement, no room for diverse interpretation and no room for dispute among reasonable people.
            Be sure to get and use the Employment Agreement, and be careful filling it out.
            So what do you call a lawyer with a double digit IQ?  Your Honor.
   {not all or even most of them, thank goodness]​

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301