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PHR · Question #140
PHR Question #140: Real Exam Question with Answer & Explanation
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.
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
Explanation
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.
Common mistakes.
- A. A termination clause defines the conditions and notice requirements under which either party may end the employment relationship, not protections tied to ownership changes.
- C. 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.
- D. 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
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