I have worked on dozens of cases centered on the issue of compensation. See the Litigation Case History link.
In Hollywood, they say that there are only 7 stories.
As I looked back over the dozens of cases I have worked on over the decades, I saw a commonalities among many of the cases, and some 2 or 3 shares themes. I concluded that in compensation litigation, there are as many as 9 stories, and I have worked on all 9. I have worked on cases from Vancouver BC to Raleigh, NC, from NYC to OC, and many in-between.
These are the 9 stories; the verbiage below is not necessarily the legally correct terminology, but rather how compensation experts speak:
- 2 or 3 individuals form a company, and one leaves – either voluntarily or by being forced out, and the other shareholder(s) raise their pay for a variety of motives
- This can be more complex in a pass-through entity (S Corp or LLC) as cash distributions to the departed owner may cease but reported profit flows through to them, creating a tax liability without the associated distributions to cover the tax
- Employment provisions in an offer letter, employment agreement, or other employment-related contract that are not delivered in the subsequent employment relationship
- Misunderstanding of terms used in an employment or compensation communication that are not clearly defined, or not defined at all
- Equity or stock in a Corp or S Corp
- Type of Member Interests or units in an LLC
- Termination or retirement
- Incentive or bonus or commission
- Compensation tied to performance criteria and the goals are never defined, measured, or paid for
- Challenge by tax authority, federal or state, and the reasonableness of compensation for executives, which can be:
- Compensation too high in a C Corp
- Compensation too low in an S Corp
- A change in control of a company and how resulting payments are calculated, and whether the compensation provisions are “single trigger” or “double trigger”
- Personal injury and the resulting loss of earnings
- Marital dissolution – high net worth couples
- Immigration cases in which the USCIS is challenging visa status for reasons of compensation levels and/or roles and responsibilities
There are stories I have likely not yet experienced, because every time I think I have seen it all, the next case proves me incorrect.