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Ommo

carve-out contract

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I am an employee at a small nonprofit that produces resources for educators. Contrary to existing practice (and common practice, I believe), one of our internal authors (Author X) approached the CEO about securing royalties for the work she produces. (We don't offer royalties to internal authors, as they are compensated through payroll.) The CEO originally offered Author X a "carve out" clause that remits royalties for her work specifically; she later expanded that clause to all internal authors. This was contrary to the advice provided by the company's attorney. (I will not go into the details of why the attorney found this problematic, as I believe this is a prima facie case of negligence.) Despite the contrary arguments of the company's attorney, the Executive Vice President, and the Director of Human Resources, the CEO proceeded with her plan anyway, shifting the responsibility of drafting the agreement from the company's lawyer to Author X's lawyer.

 

To me, this whole thing stinks of a sweetheart deal with Author X. The agreement is still pending. Is there legal recourse to provide transparency on this issue, and would this action by the CEO — which impacts the organization negatively on several fronts — be considered a dereliction of duty?

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1 hour ago, Ommo said:

To me, this whole thing stinks of a sweetheart deal with Author X.

 

So?  You can call it whatever you like, but that doesn't transform it into any sort of legal issue.

 

 

1 hour ago, Ommo said:

Is there legal recourse to provide transparency on this issue

 

Legal recourse for whom?  For you?  Nothing in your post suggests you would have standing to do anything.  I'm also not really sure what you mean by "provide transparency."  Non-profit entities are governed by certain laws (at both the state and federal level -- and you didn't see fit to identify the relevant state), but nothing in your post indicates any violation of any law.

 

 

1 hour ago, Ommo said:

would this action by the CEO — which impacts the organization negatively on several fronts — be considered a dereliction of duty?

 

Considered by whom?  In any event, like "sweetheart deal," "dereliction of duty" isn't a term that has any legal meaning, so this question doesn't really raise a legal issue.

 

One additional comment:  Putting aside the company's non-profit status, there could be numerous, legitimate reasons why a company might want to deviate from normal policy in dealing with a particular individual or entity.  Maybe your company's CEO views this particular author as being particularly valuable to the company.  Maybe this particular author has more bargaining power than others.  Nothing inherently wrong with any of that.  If you really feel like the CEO did something improper, you're free to bring it to the attention of the company's board of directors.

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