Tracy Chapman famously sang about needing “one reason to stay here.” But when severance is involved, employees may look for one reason to leave—one “Good Reason.”
While Ms. Chapman didn’t sing about them, many employment contracts include a “Good Reason” clause, which allows the employee to resign and still receive severance if certain conditions are met.
For example, many Good Reason clauses provide that an employee can receive severance upon resignation, so long as the employee has suffered from a reduction in salary or benefits, diminution of duties or responsibilities, or due to a forced relocation. In some cases, these Good Reason clauses only apply when an employee resigns following a change in control of the employer (for example, a merger or acquisition).
It is the norm for high-achieving employees to strive for and tout their successes. Recently, however, one person’s novel reaction to failure—his own termination—may show a future employer as much about his character as any of his considerable accomplishments.
Sree Sreenivasan was plucked from Columbia’s School of Journalism a few years ago to become the New York Metropolitan Museum of Art’s chief digital officer. According to Quartz, Mr. Sreenivasan brought the famed museum into the digital age through inventive social outreach efforts and a revamped, mobile-friendly website.
Last week, the U.S. Supreme Court issued a plaintiff-friendly decision resolving disagreements over the question of when a constructive discharge claim accrues. The lower courts didn’t agree on when the clock should start ticking on claims by employees that they were forced to quit, creating uncertainty for plaintiffs who faced the possibility that their claims would be barred by the statute of limitations if they didn’t sue soon enough.
A contract between an executive and an employer does not always have to be in writing.
Sometimes, employees can enforce oral promises. Agreements can also be implied based on the parties’ conduct, even when no one made a promise, either in writing or orally.
But contracts that aren’t in writing can be much harder to enforce, as the Third Circuit’s recent decision in Steudtner v. Duane Reade, Inc. shows.
Timing is everything, they say. That’s especially true when it comes to filing a lawsuit: if your timing is off and you file after the statute of limitations – the amount of time the law allows you to bring your suit – has expired, you can be out of luck. It becomes more complicated because each state has its own set of these time limits. Some states give you plenty of time to sue. Others, not so much.
In the employment context, the former general counsel of Martha Stewart Living Omnimedia learned that lesson this week the hard way. Gregory Barton sued his former employer, alleging he was denied the right amount of severance pay after he was asked to leave the company. Barton thought New York’s window of six years to bring his suit applied. Wrong, held the New York judge as she dismissed his case: Delaware’s one year limit applied.
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