There was a “Change in Control” at my job. What does this mean?

Generally a “Change in Control” refers to a change of ownership. Besides a change in ownership, a change in control may result in changes throughout the company that trickle down to the employees. Many employees feel uneasy and unsure of how a change in control and the possibility of a new management will specifically impact the employee.

Some modifications that may result from a change in control is a change in management, restructuring of jobs, merger of two entities that results in redundancy of certain employees and possible layoffs. A change in control may also provide new opportunities to employees due to the possibility of greater resources and revenue.

Some senior level executives have specific language in their employment agreements that define what constitutes a change in control. Along with the clear definition of change in control, some of these executives also have language within their employment agreements that allow them the option to resign from their employment with good reason. Resigning from their employment with good reason may afford them certain benefits (i.e. bonus, payments, severance, continued health benefits). These benefits, if available, are usually set forth in their employment contract.

In moving forward with a change in control, there may also be concern about mass departure or turmoil resulting due to leadership changes. As such, in preparing for the transition of ownership, oftentimes, key, valued employees may be offered a retention agreement to motivate these employees to remain with the company for a period of time. These retention agreements may offer employees a term of employment, bonuses, increased pay, stock, etc.

A change in control may also result in new documents being provided to the employees, including confidentiality agreements, non-compete agreements, non-disparagement agreements, new handbooks.

A change in control may also result in a change of benefits offered to employees (i.e. health insurance, 401K, profit sharing, life insurance).

Setting aside the fear of something new, a change in control may offer employees opportunities to, among others, obtain new skills, obtain new resources, to transition away from certain managers, seek promotions, enhance their compensation, to be team players and to prove their value. It also provides employees an opportunity to consider their employment values to decide if this is the job that the employee wants to remain at or if they want to begin a new job search.

To understand your rights, obligations and/or options due to a pending or recent change in control, contact Sheree Donath by clicking here.

(Attorney Advertising)