Although employment agreements are not required for most employment relationships in the U.S., many employers use them for some or all workers. In addition to expressing the material terms and conditions of the employment relationship (including salary and benefits), an employment contract should also describe the position's essential functions and its role within the overall organization, as well as lay out the legal rights and responsibilities for both the employer and the employee, during and after employment.
To say that a large portion of the American workforce is facing uncertainty is an understatement. Reports of furloughs, pay cuts, and layoffs attributed to the COVID-19 coronavirus pandemic make the news regularly. Many employees who are continuing to work in essential services are being required to go above and beyond their regular job responsibilities in almost unprecedented ways or to change their duties completely.
When negotiating an executive employment agreement, you have to consider not only the compensation but also the tax consequences and issues that may arise because of when or how you are compensated. To fully understand and avoid any potential pitfalls, you should ensure your compensation agreement complies with the requirements of section 409A of the Internal Revenue Code, a law that addresses taxation and regulation of deferred compensation arrangements.