One unusual feature of the executive employment relationship is that while an employer promises to provide a job for a set term of months or years on pain of having to pay the executive’s compensation, the executive is not obligated to stay in the job for a single day longer than he or she chooses to work. This has been true since the Thirteenth Amendment to the United States Constitution abolished slavery.
Of course, employers customarily insist on a contractual provision requiring a College or University President or Head of School to give a substantial period of notice before resigning. 90-, 120- or even 180-day notice periods are not uncommon.
By themselves, these notice requirements are legally unenforceable: our President or Head of School who is unable to stomach the job for even a single additional day can simply walk away. The best the school can (and usually does) do is to tie resignation and notice to the forfeiture of certain benefits. Walk away and you will give up a variety of monetary benefits, including salary, bonuses, pension or other retirement contributions; walk away without giving the full amount of notice specified in the contract (required to be given in writing and in the precise manner set forth in the contract) and there may be additional monetary forfeitures, including, for just one example, previously earned sabbatical time.
You might think that such contractual details would not raise an issue in most executive employment situations, and that was true until relatively recently.
In the past, Presidents of Colleges and Universities and Heads of School only had to understand and accept the fact that no leadership decision they made would please all of their constituent groups. One of our clients reported, with a rueful smile, that her completely reasonable decision to do away with a single sports program at a small college (much too costly, too much potential liability, etc.) meant that only about 200 of the alumni were no longer speaking to her!
However, following the pandemic, and heightened by the well-publicized campus protests of the past year, some of these jobs have become all but unbearable. The standard tenure for College Presidents reportedly is down to seven years at most. The day when the head of any educational institution might last in the job for decades is gone, along with Mr. Chips, Lucky Jim and all-male professors in tweed jackets smoking pipes.
Indeed, as attorneys representing executives in colleges, universities and independent schools, part of our legal practice in the past two years has been negotiating the terms for early exits of educational leaders whom their schools would prefer to retain. We have also negotiated renewal contracts for sitting Presidents and Heads of School unwilling to agree to the full length of the contract which the school originally proposed.
One leading academic of impeccable administrative as well as scholarly credentials told us that there was literally no amount of money which could induce him to accept a college or university presidency. Several have described themselves as “recovering college presidents”.
The actual statistics have not yet shaken out, but it certainly appears that the pool of high-level candidates for the top jobs in higher education has been reduced. This means that schools are more eager than before to hang on to good sitting CEOs.
This is where the ordinarily minor contract provision of “notice required for resignation” has emerged from the wings and stepped firmly to center stage in our contractual negotiations for executives in the educational arena.
How long a notice period is both reasonable and realistic? How drastic should the monetary forfeitures occasioned by a failure to give timely or proper notice of a resignation be? How do these contractual conditions square with the bedrock legal principle that no one should have to work at a job longer than they can stand?
Stay tuned for further developments in this area, where an old contractual clause is taking on new importance.
