The general principles of compensation are governed by statues of the state. Many companies are based in Delaware and other states often comply with Delaware`s compensation law. In general, a company may compensate its officers if they acted in good faith, in a manner reasonably considered to be in the best interests of the company and which had no reasonable reason to consider their conduct to be unlawful. In some states (minnesota, for example), the power to compensate a corporate officer becomes an obligation, with compensation mandatory for certain types of rights. “It`s the law in many states, in the absence of an agreement,” Milligan says. The other type of compensation is contractual, which is in some cases broader, such as consent to compensate part of any claim arising from the other party`s conduct or the doctor`s behaviour. One of the ways in which a compensation plan can offer protection is to oppose the claims of an officer`s former employer. For example, Ed Executive is leaving Company 1 to join Company 2. Ed Executive signs an employment contract with Company 2, which contains a compensation clause stipulating that 2 Ed Executive must compensate and defend claims, damages, legal fees and expenses related to Ed Executive`s obligations with Company 2. After Ed Executive began his work for Company 2, Company 1 sued him and claimed that his new job with Company 2 was contrary to various post-restrictive agreements included in his employment contract with Company 1.
As Company 2 has accepted compensation from Ed Executive, Company 2 must pay all costs and costs incurred by Ed Executive to defend the rights of The Company 1. In order to maximize an executive`s compensation shield, the company`s obligation to compensate should be maintained after the departure of a company`s management. This requires the company to repay to management, even after the termination of the employment relationship, future claims on the previous work of management. Keith Clouse is an employment law specialist with more than 25 years of experience representing C-Suite executives and executives, contractors, physicians and businesses in complex litigation, arbitration and negotiations. Senior managers, physicians and other professionals routinely rely on Mr. Clouse for labour contract expertise and advice, non-compete agreements, severance pay, stock bonuses, commercial litigation and breach of trust obligations. He is Board Certified in Labor and Employment Law of the Texas Board of Legal Specialization. He can be reached at email@example.com.
By accepting contractual compensation, a physician may be required to grant an employer full reimbursement of events to be compensated. “Sometimes this compensation may apply, even if the employer`s negligence may have caused its harm,” says Sullivan. For example, when a doctor is accused of having a heart attack in a busy emergency room, a compensation agreement could force the doctor to bear all the costs incurred by the hospital to defend the complaint, even if the misconduct occurred because the hospital severely underestimated the emergency department.