Promises Of Bonuses And Extra Pay For Staff Create Risks If Undocumented

A famous musician faces a lawsuit brought against him by his former manager, who claims the musician owes him $20 million in commissions.

The musician hired the manager in 2005 to renegotiate a deal. The former manager alleges that the defendant failed to pay him the full amount he was promised if he renegotiated the deal, and the musician terminated him. "Ex-Manager Sues Lil Wayne for $20M Over Commissions" (Dec. 10, 2020).

Commentary and Checklist

Outside of wages, any compensation agreements with staff, including guarantees of bonuses, should be documented in detail, including the conditions that must be satisfied before the extra compensation is due and owing and any exceptions to it.

Termination of staff made after a claim is made that wages were not paid as promised will often lead to claims of wrongful termination. The costs associated with the wrongful termination claim can exceed the bonuses or wages due.

Family employers should follow these steps in agreements to help avoid such claims:

·      The terms of contracts should be precise and clearly-stated in easy-to-understand language.

·      Make sure that the contract does not ask staff to give up anything that they have a right to under federal, state, or local law.

·      Specify in the contract whether or not it can be terminated without cause and specify what actions on the part of the staff member could lead to termination.

·      Work with your legal counsel to make sure you understand all of the requirements of the contract.

·      Have staff sign that they understand the terms of their contract. Allow staff to discuss the terms with their legal counsel before signing the contract.

·      Routinely review staff contracts to make sure both you and staff are meeting all requirements.

·      Document actions taken to meet the terms of the contract.

·      If a staff member claims that you violated an agreement, immediately meet with the staff member and an arbitrator trained in contract law to determine if a violation occurred. Remedy any contract violations immediately.

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