Law Office of John J. Tormey III, Esq. – Entertainment Lawyer, Entertainment Attorney
John J. Tormey III, PLLC
1324 Lexington Avenue, PMB 188
New York, NY 10128 USA
(212) 410-4142 (phone)
(212) 410-2380 (fax)
Employment And Severance Scenarios: Written By New York Entertainment Attorney And Employment Lawyer John J. Tormey III, Esq.
© John J. Tormey III, PLLC. All Rights Reserved.
This article is not intended to, and does not constitute, legal advice with respect to your particular situation and fact pattern. Do secure counsel promptly, if you see any legal issue looming on the horizon which may affect your career or your rights. What applies in one context, may not apply to the next one. Make sure that you seek individualized legal advice as to any important matter pertaining to your career or your rights generally.
In prior articles I have alluded to the fact that many people think being an entertainment lawyer is a romantic existence. Yet the brass-tacks principles of employment law and the harshness of employee severance and termination scenarios often overtake that romanticism. Being an entertainment lawyer entails a lot more than hanging-out with talent backstage or on the tour bus. In prior articles I have also alluded to the fact that artists often have “day jobs” providing their paying employment to subsidize their artistic ventures. As a New York entertainment attorney who grew up in a show business family in the midst of performers, I’m used to this. Most of these artists intend to abandon these day jobs, with or without an employment severance package, once they get signed to a development deal, record contract, or otherwise “make it”. But what happens in the meantime? What if an artist works for a company that intends to jettison him or her as an employee, rather than the other way around? What if the company counts on using an employment severance package as a hedge against risk of an after-occurring wrongful-termination lawsuit?
These past few years have comprised a particularly bad time in terms of employee and contractor lay-offs and firings. As a working entertainment lawyer in New York I have seen many artists and others downscale and change jobs in recent years. Many situations which used to prompt a severance package to materialize in the prior decade, do not do so any longer. The fact of the matter is, a large proportion of employees and other workers misplay the handling of their job exit, if and when it occurs in the employment law context. In the interests of employee and worker empowerment before the blue-ink dries on the release and settlement agreement or other severance documents, this article follows. Though written by me as a media and entertainment attorney working with entertainers, the same principles apply to employment work in other industries and sectors.
I suppose that the first rule of employee empowerment is fairly pedestrian-sounding, but vitally important. An employee must read and review every employment document pertaining to his or her job and career, carefully - including the following disclaimer. The employee should secure counsel promptly, if he or she sees any legal issue looming on the horizon which may affect the employee’s career or rights - including legal issues relating to employment and severance packages. As an entertainment lawyer friend and entertainment law professor of mine used to say, “every deal is different”. What applies in one employment context may not apply to the next one. The employee must make sure that he or she seeks individualized legal advice as to any important matter pertaining to the employee’s career or rights generally. It is not uncommon that a soon-to-be-terminated worker starts calling attorneys as soon as offered an employment severance package.
There are attorneys, entertainment attorneys and otherwise, who routinely handle “employee-side” legal matters. A number of attorneys may be able to do so affordably for even a modestly-compensated employee, in the context of a severance proposal or otherwise. An employee-side lawyer should be accustomed to representing people who have limited financial resources, and this is a particularly-familiar fact-pattern for an entertainment lawyer handling artist-side work. There are parallels. And, assuming that one is not a lawyer, one should no sooner handle one’s own legal work than handle one’s own dental or medical needs oneself. The severance and employee-exit scenario most often entails some analysis of employment legal issues governing the exit. Given the economic realities faced by those in the artistic world, all entertainment lawyers need to be familiar with these employment legal issues.
The employee should remember that most employers themselves have in-house or outside attorneys. Indeed, the employment, severance, settlement, release, and exit documents are most often drafted by these attorneys. They may be entertainment attorneys, employment attorneys, litigators, or generalists. However monikered, often an employee’s securing of his or her own counsel is the only way to equilibrate the proverbial scales of justice in a severance or other job-related scenario. Exploitative and even abusive treatment of employees is unfortunately rampant in the employment law context, including at the time of worker exit - particularly in highly-competitive cities like New York and Los Angeles, and in highly-competitive industries like entertainment and media as any entertainment attorney will tell you. The good works and lessons taught by historical pro-labor figures like Samuel Gompers should not go for naught. The employee should not look to the employer, or the vicissitudes of chance, to protect the employee and the employee’s own legal rights in the workplace or in the context of a severance or other exit from employment. Rather, the employee should empower himself or herself, and should not be inhibited in seeking out the advice and opinions of those professionals who handle employee-side legal work for a living.
On to the substance and detail.
The lead singer of a rock band about to step onto a live television set is furnished a “release” for signature five minutes before scheduled air time. The entertainment lawyer representing the singer might cry, “No!”. While this could sound like an entertainment attorney observation meant only for the golden days of the Ed Sullivan Show, the rule of not signing on-the-spot is true in the employment context and across all other subject-matter areas and sectors as well. Like the artist, the employee, too, should never sign any document, employment document, severance document, or otherwise, on-the-spot. The employee should not be bullied into signing on the spot, as a product of fear, or the purposeful manipulation of same by oppressive employers or ex-employers. There are very few situations in life where one truly must sign a document on-the-spot, and an employment-related signature is usually not one of them. One of the only valid such situations that I can recall from my own experience is when an attorney must sign a stipulation on-the-spot before a judge, as the only way to preserve the attorney’s client’s rights. This will not likely be a situation that one will ever have to encounter as an employee or terminated employee in an employment severance context or otherwise. Employers typically offer severance to terminated workers out of fear of being sued by them, meaning that the worker often has more leverage in the employment context than he or she initially thinks.
It is astounding, though, as to how many people make this mistake of “on-the-spot” signing, time and time again, in the entertainment law context, and in the employment severance context and in the workplace and business-world generally - even if these signatories know better. The employee should trust his or her own instincts. If it smells bad, it is bad. If anyone, be it a car salesman, a manager or talent agent you’ve never heard of before, or, yes, an employer offering an employment severance package while terminating your employee services, waves a document at you as panaceatic – you should be suspect. The entertainment attorney’s first instinct is that a document waved at you for on-the-spot signing is not worth to you the paper it is printed on. In the employment context, if the employer presents the employee with a severance document or other document and tries to pressure the employee to sign that document on-the-spot, the instinctual reaction should be similar. The odds are better than 99% that the employer is trying to take advantage of the employee in that latter case - and trying to force the employee to thoughtlessly relinquish in haste valid and enforceable legal rights that the employee already and otherwise possesses.
By comparison, what does an entertainment attorney do, when given or forwarded a document intended for signature in the context of a rights deal, for example? The entertainment lawyer will typically indicate to the party who proffers the document for signature: “Thank you - my client and I will review and respond to this document”. Period. If the “proffering” party then says: “Hey entertainment lawyer, aren’t you or your client going to sign it now?”, the entertainment attorney answers with a flat “No”. Although it is possible that the proffering party will thereafter withdraw whatever offer the document contains and take it permanently off-the-table, they typically won’t. And if they do, it probably was not an offer worth taking anyway. This analysis also applies to written employment severance packages, releases, and settlement agreements, just as it does to talent agreements, agent and manager agreements, car purchase agreements, and just about any other form of proposed contract that one might ever be offered. Again, this rule is by no means entertainment attorney-specific, but instead is generalizable to the employment context and across all sectors and industries.
The protocols of professionalism create an expectation that all parties should be given a reasonable opportunity to review a document, including a proposed employment severance document, prior to either: (1) signing it as written (an extremely unlikely occurrence, by the way, if a good attorney reviews it for the employee); or else (2) responding to the proposed document with a fax, letter, red-line comparison draft, or mark-up indicating the receiving party’s proposed changes. This would normally be the way entertainment attorneys would interact with and between each other on a proposed license agreement, for example. The two entertainment lawyers would expect careful reading and deliberation on either end. If a proffering employer-party in the severance context, however, instead threatens to withdraw the document “since it wasn’t signed on-the-spot”, then they are just being ridiculous and overbearing. The odds are, again, better than 99% that their “non-negotiable” document would have been a legal disaster for the employee to sign as initially proposed. Again, this observation applies to employment severance packages, and most all other forms of proposed draft agreements in most all contexts other than employment, too.
Some employers in the media and entertainment industry context and otherwise even have the unmitigated gall these days to ask employees to prospectively waive their right to a jury trial in the context of so-called “non-negotiable” employment agreements including severance or other exit agreements, as but one type of egregious example of the foregoing. It is jungle out there. If one is asked to sign an employment severance agreement with jury trial waiver or other exit document on-the-spot, it is entirely fair and within one’s rights to say that “I will need to review this document with my attorney”, or “I don’t sign documents of a legal nature without attorney review”. And, if the proffering party disputes the employee’s right to legal representation, perhaps this is someone that the employee doesn’t want to accommodate anyway, on principle. This country’s entire legal history was predicated, in substantial part, on the rights of the individual, and the individual’s right to counsel. The framers of the Constitution worked hard. It would be a mistake to let them down now.
The next rule is a corollary to the prohibition on “on-the-spot” signing: The employee should never believe the employer, when the employer offers a “standard” form of employment severance agreement or otherwise. An entertainment attorney will tell you that “standard” is the biggest lie in the entertainment industry. It should be considered comparably fallacious in the employment context. If the employee wants to empower himself or herself in the workplace and in the commercial world, what the employee needs to do is repeat the following phrase repeatedly, like a mantra: “There is no such thing as a ‘standard form’. There is no such thing as a ‘standard form’”. Because, there isn’t, as any entertainment lawyer should tell you.
Rather, “standard form”, after an entertainment attorney on the receiving end translates it, just means “get over on you”. Similarly, a “standard form” employment severance document is synonymous for “oppressive and one-sided form that takes advantage of the employee”. The employee should remember that the draftsperson of a so-called “standard form” is probably a fairly predatory-minded employer-side lawyer handling the company’s employment severance protocols en masse who is under absolutely no obligation to protect - or indeed even acknowledge or accommodate - the employee’s interests. Indeed, the opposite is true. The employer-counsel’s professional obligation as a member of the Bar handling the employer-side severance work is to be a zealous advocate of only his or her own client’s interests - that is, the employer’s interests only. If the employee signs an employment severance document because the other side tells the employee it is a “standard” or “non-negotiable” form, then the employee might as well be walking off the roof of the proverbial building just because the employee was told to do it. The employee should not trust “standard forms” in the employment severance context or otherwise, or those employers who purport to furnish them. Again, this may be an entertainment attorney observation, but it applies to all workplaces and other contracting situations as well.
The employee should make sure to have retained copies of every single scrap of paper pertaining to his or her employment relationship with any company, up to and including the time of the severance communications. The employee should not trust or rely upon the employer to give the employee copies of - or even access to - those employment documents and the employee’s human resources file, if and when the employee’s work honeymoon period with the employer ends, or if and when the employee’s services are, or are about to be, terminated in a severance or other context. Remember that the Japanese model of “employment for life”, and the antiquarian U.S. model of the gold watch after 40 years of service, just simply do not apply anymore. Severance and parachutes - and these days the absence of them too - often replace the old model of dutiful loyalty.
Our United States work-force is more mobile and transient than it ever has been. The workforce I see as an entertainment attorney practicing in New York, is most decidedly such a miasma. People change jobs all the time, with or without accompanying employment severance packages and exit agreements. The motility of the workforce, by the way, greatly empowers employees to seek out their market-value salary and non-abusive working conditions – so it is not necessarily a bad thing. As a practical matter, in New York or elsewhere, entertainment industry or otherwise, the employee should work with the assumption that the employee will one day have to depart every job ever taken with or without severance, no matter how rosy the employment picture of any job looks initially. If the employee stays at that job until retirement, more power to the employee. But the employee should realize that the statistics indicate this would be an extremely unlikely occurrence in this day and age given current job-market employment conditions.
The employee should make sure that, prior to any severance scenario, his or her exhaustive, fully-complete “job file” is kept at the employee’s home - not in an office desk drawer, not in the company’s file cabinet - not anywhere near the employment workplace. It is astonishing as to how many employees fail to do this simple thing. The employee should remember that the old-fashioned paradigm of “two weeks advance notice and severance” is rapidly becoming a vestige of the past, particularly in the media employment context as I see it from my vantage-point as an entertainment attorney. Many media, software, and other types of employers will now think nothing of having an employee escorted out of the workplace by a human resources rep, or even by security personnel, the day and even moment the employee is terminated. Usually when this happens, the employee is not smiling and holding a severance check when led out of the building towards the parking lot or subway.
Why is this happening? Because employers are becoming increasingly afraid of disgruntled employee (or ex-employee) theft of company material, misappropriation of software, and even sabotage and violence in rarer cases. The employment misappropriation threat is felt particularly by media and entertainment companies, and unfortunately workplace violence incidents are on the rise everywhere. Some employers see the promise of severance - carrot-on-a-stick illusory, or not, as finally offered - to be a hedge against these risks as well. The moral of the story - the employee should keep perfect and thorough contemporaneous documentation of his or her employment file, at home, well prior to any severance scenario.
The employee should save copies of everything - offer letters, acceptance letters, employment contracts, “non-compete” documents, non-disclosure or confidentiality agreements, employee handbooks, time cards or time sheets, performance reviews, expense and reimbursement forms and receipts, insurance and COBRA documents, inter-office memos relating to work and performance, and anything else relating to the employment relationship with the company. The only exception would be, the employee should not remove any material from the workplace which is the employer’s or someone else’s property, or which the employee is contractually or otherwise obligated not to remove from the place of work. As an entertainment attorney handling production matters, I expect this issue to arise often, since an employee will usually depart while at least some non-fungible projects are still in development or production at the employer’s premises. This question of property ownership, intellectual property and otherwise, is sometimes a more difficult judgment to make than it sounds. If ever in doubt - you guessed it - the employee should seek an attorney’s advice prior to any such removal and prior to the closure of the employment severance or other exit documents.
Prior to the severance scenario materializing, the employee should be making thoughtful dated written notes to the employee’s own files and keep them at home, anytime any legally-relevant event happens during employ - such as a supervisor expressing either approval or disapproval with one’s work, or a fellow employee making suggestive or harassing comments in one’s presence. These written notes should be reduced to writing privately, immediately after the event occurs, as opposed to a day or more later. These written notes should quote what was said verbatim (yes, using actual quotation marks, and accurately). The employee should not let these notes merely rely on paraphrases, if possible.
These written notes should be taken home to the extent allowed and feasible, by the employee, on the date of the event so recorded, and should be stored securely in the employee’s employment file at home until ever needed. One would be surprised to learn just how many otherwise-valid employee-side severance-related and other legal causes must be wholly abandoned, simply for the employee’s idle failure to make a written verbatim record of important workplace conversations. This overall issue arises in the context of employment attorney and entertainment attorney work, though familiar to most all other legal practitioners as well. For legal purposes, the employee must assume that a re-constructive written record made in retrospect the following week instead, or a non-verbatim note, is near-worthless relative to one taken at the moment. What the employee wants is what is known as a “contemporaneous written record” - that means, “at the same time as the occurrence of the event itself”. And yes, for most forensic purposes in the employment context, that also could include a careful verbatim written record made by the employee five minutes after the event ends. The employment severance dialogues themselves, if and when verbal alone, should be reduced to writing by the employee in this fashion, too.
Finally, the last rule is a corollary to some of the others mentioned immediately above: The employee should bring or forward a complete photocopy (not originals) of the employment file which the employee kept at home, to the attorney or attorneys – entertainment attorney or otherwise - that the employee is considering to represent the employee in the negotiation of any employment exit and severance agreement, or any litigation or proceeding for wrongful termination of the employment or otherwise.
The employee should remember that what he or she discloses to an entertainment lawyer or any other attorney is strictly confidential, even if the employee never ends up retaining that lawyer to handle the employment severance or exit agreement or any other work. This rule of confidentiality is a serious and inviolate rule. That lawyer could lose his or her license to practice law, if he or she ever betrays the employee’s confidences. Accordingly, after first making sure that the lawyer doesn’t also represent the employer on the employment severance matter (or even otherwise), the employee should be totally candid and thorough in terms of the facts brought to that lawyer’s attention. The employee should not “screen out” facts that the employee thinks are irrelevant or that the entertainment or employment attorney “would never be interested in”. After all, if the employee is not an attorney himself or herself, he or she could be well wrong about this type of conclusion. It is the attorney’s job, not the employee’s, to filter out the irrelevant from the relevant. The employee should give the lawyer all the raw data. The matter may be the first employment severance deal which the employee has ever lived through, but probably not the lawyer’s.
The employee should cover any packet furnished to his or her actual or intended lawyer with a transmittal letter bearing the legend “Strictly Confidential”, or words to similar effect. That cover letter should include a typewritten or word-processed narrative in the employee’s own words, of all the facts and chronology of the severance or other employment matter about which the attorney is being contacted. The employee should not rely upon an oral soliloquy to make his or her point. Rather, the employee should write it all down, in legible font or typeface, before contacting the lawyer. Again, the employee should ensure, prior to divulging these facts to any such attorney, that the attorney does not already represent the employer or any other party closely affiliated with the employer on the employment severance matter (or even otherwise). It is a small world, and the entertainment and employment law bar in the employee’s locale may be even smaller.
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My law practice as an entertainment attorney includes state and federal employment law matters, including terminations, severance packages, executive compensation, settlements, releases, and other human resource matters including those that may arise in the fields of film, music, television, publishing, Internet, and other media and industries. If you have questions about legal issues which affect your career, and require representation, please contact me:
Law Office of John J. Tormey III, Esq.
John J. Tormey III, PLLC
1324 Lexington Avenue, PMB 188
New York, NY 10128 USA
(212) 410-4142 (phone)
(212) 410-2380 (fax)
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Employment And Severance Scenarios
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