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Wrongful termination suit surfaces during Beats’ sale talks

Employment contracts aren’t the norm for most Los Angeles workers. California, like many other states, has adopted an “at-will” employment policy, giving employers the option to fire workers for any reason — as long as it’s a legal one — at the time a company chooses. Employees also have the right to leave a job under the same conditions – without reason or time restraints.

Some employers and workers are bound by employment contracts. The legal agreement sets conditions, which may or may not include terms under which an employee is fired. Each party is responsible for living up to the agreement and may hold the other party liable for breaching the contract.

Contract breach is alleged in a lawsuit filed by David Hyman, who founded the music subscription service MOG, against Beats Electronics. MOG was sold to Beats, owned in part by musician and record producer Dr. Dre, in 2012. Hyman remained head of the subscription service after the sale, but not long enough to collect an alleged Beats equity stake the chief executive officer was promised.

The $20 million wrongful termination lawsuit claims Hyman was fired in bad faith less than a year after he moved to Beats. The suit alleges Beats let Hyman go to avoid paying equity based on the MOG deal, with equity payments due following a one-year employment anniversary. The plaintiff doesn’t believe Beats’ version – Hyman was the one to breach the employment agreement.

The employment dispute coincides with news reported in a recent Reuters article that Apple Inc. is in negotiations with Beats Electronics over a possible sale. The tech giant might acquire Beats for $3.2 billion. Dr. Dre and co-founder Jimmy Iovine are Beats majority shareholders; neither are named in Hyman’s suit.

The breach of any business contract can be a serious legal matter. It’s advisable for employers and employees to have the agreements reviewed by attorneys before signing, so contractual provisions are clear.

Source:  Courthouse News Service, “Exec Sues Dr. Dre’s Beats for $20 Million” Matt Reynolds, May. 16, 2014

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