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PHR · Question #140

Which of the following clause protects the employee's job and compensation in the event of a reorganization, acquisition, or merger, for a specifed period of time?

The correct answer is B. Change of control. A change of control clause in an employment contract protects an employee's job and pay during corporate reorganizations, acquisitions, or mergers for a defined period.

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Question

Which of the following clause protects the employee's job and compensation in the event of a reorganization, acquisition, or merger, for a specifed period of time?

Options

  • ATermination clause
  • BChange of control
  • CAdvice of counsel
  • DDisability or death

How the community answered

(38 responses)
  • A
    3% (1)
  • B
    76% (29)
  • C
    16% (6)
  • D
    5% (2)

Why each option

A change of control clause in an employment contract protects an employee's job and pay during corporate reorganizations, acquisitions, or mergers for a defined period.

ATermination clause

A termination clause defines the conditions and notice requirements under which either party may end the employment relationship, not protections tied to ownership changes.

BChange of controlCorrect

A change of control clause (also called a golden parachute or CIC provision) is a contractual protection triggered when ownership or corporate structure changes through a merger, acquisition, or reorganization. It guarantees the employee continued employment, unchanged compensation, or severance benefits for a specified period, shielding them from adverse employment actions that result directly from the transaction.

CAdvice of counsel

An advice of counsel clause grants an employee the right to consult an attorney before signing or executing an agreement and does not address job protection during corporate events.

DDisability or death

A disability or death clause specifies benefit continuation or contract dissolution procedures if the employee becomes incapacitated or dies, unrelated to organizational restructuring.

Concept tested: Change of control clause in employment contracts

Topics

#change of control clause#employment contracts#mergers and acquisitions#compensation protection

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