Protecting Your Business When A High-level Employee Divorces

On Behalf of Ezell Law Firm, LLC

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Jul 30, 2024

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Business Law

Most businesses would rather not have any involvement in an employee’s divorce. However, a divorce requires spouses to produce accurate and complete financial information. That means salary data, of course. However, owners and executives can have complex compensation packages that include bonuses, stock options, deferred compensation, valuable perks and more. Even non-executive employees involved in sales who get commissions can have complicated pay records.

There are two big issues to consider. One is ensuring that no confidential information involving the company or other employees is compromised. Another – particularly for smaller businesses – is the sheer amount of time and manpower that may be required to locate and produce the required information. Here are a few things to consider.

Understand what information the employee’s spouse has a right to see

Since Louisiana is a community property state, they likely have a right to see their compensation records — at least those from during their marriage. If the divorcing employee is a partner in the business, it’s more complicated because they own a share of it. Divorce is often addressed in partnership agreements.

Making information accessible to employees can save you time

Some businesses organize employee compensation information so that they can get it themselves. You can send it out to them quarterly or on whatever schedule you choose or simply let them know how to access it.

Know how to protect confidential information

If you have to share information that cannot be made public, you may need to take steps like requiring a confidentiality agreement. This is more likely if a company owner or partner is involved.

Don’t play games

Some divorcing spouses will try to get bonuses and other payouts delayed until after the divorce is final so they don’t have to split them. Knowingly going along with that can potentially subject a company to legal and financial penalties.

One way to avoid unnecessary privacy, as well as legal issues when providing compensation and other information for a high-level employee divorce, is to have experienced legal guidance. It can also help you put processes and policies in place to use in the future.