Divorce can feel like an octopus whose tentacles are hard at work sucking in whatever prey is in its path. For business owners with an employee going through a divorce, this could mean you and confidential aspects of your business are fodder for discovery. Consequently, supporting an employee so their divorce doesn’t interfere with their performance or disrupt the workplace may not be all you have to worry about.
As a law firm owner and de facto business owner who counsels other business owners on managing requests for sensitive information while maintaining their business’s stability, I know that the prospect of an employee’s divorce can be overwhelming, not to mention threatening. Here’s what you can expect and how to strategically protect your interests.
Subpoenas For Financial Documents
No business owner enjoys being told to “open their books” by a stranger for the viewing pleasure of others—your employee, your employee’s soon-to-be-ex, their respective lawyers and legal staff, court staff, forensic accountants, a mediator, a judge and whoever else.
Scared?
Don’t be. Subpoenas must be limited in scope. When a subpoena relates to an employee’s divorce, a request for documents should stick to what’s directly related to the employee’s employment and compensation. Think background screenings for the employee, the contents of their employment file, proof of on-the-job training, benefits statements, time logs, attendance sheets and payroll stubs.
Both sides may find this information helpful, so you want to cooperate and promptly produce what you’re asked to. If you have any questions about the production of documents, it’s wise to speak with a divorce attorney experienced in business divorce.
It’s important to note that subpoenas requesting information beyond financial documents, such as mental health assessments and drug testing, may be protected. Should you receive such a request, tell your attorney at once. They may want to file a motion to quash that part of the subpoena, which, if successful, would mean you wouldn’t have to produce those documents.
Finally, subpoenas can threaten the privacy of your other employees. When compiling documents requested in a subpoena, take steps to redact any unrelated and confidential information.
Depositions About Employee Earnings
Once you fulfill the subpoena’s demands, your involvement may not be over. As a next step, you may be deposed. During a deposition, you may be asked to expound upon the documents you produced. Specifically, you may have to provide more detailed information about restricted stock units (RSUs) and their vesting schedules, bonuses and more.
Depositions can be the cause of uneasiness for many. This can be especially so if your company’s records aren’t in order or if, as a business owner, you are unfamiliar with the nuances around these subjects. Having others positioned to handle financial matters on your behalf is common, especially in larger organizations. Even so, the buck stops with you. If you will be deposed, a family law attorney experienced in business divorce can explain your rights and responsibilities and help you prepare.
Time Off For Conferences, Depositions, Court Appearances And Trials
What you may start realizing is how much an employee’s divorce, a situation belonging to a person you may hardly know, can weigh on your time. Apart from the stress and annoyance you may be feeling, particularly if you are a small business owner, logistically, it can take substantial time to assemble the information you need to fulfill a subpoena’s requests and accurately answer questions in a deposition.
Conferences with a divorce attorney who’s handling these matters also require time. The same holds for attending depositions and making court appearances, including the possibility of a trial. In some cases, the strain can interfere with you running your business, causing you to wonder if you can turn to your business interruption insurance for compensation.
The answer is likely no. Business interruption insurance would typically only be an option when a physical loss covered in the policy occurs. Inconvenience and time lost due to an employee’s divorce do not constitute such a loss. That said, it doesn’t make the loss any less real. So, as a business owner, what can you do to stop the bleeding of time and, with that, money? Do what you can to make the process run smoother.
How To Limit Your Exposure
If one of your employees involves you in their divorce, it’s a good idea to immediately seek guidance from an experienced attorney who understands how divorce and business ownership relate. This person should communicate well, listen intently and have extensive experience in this area of law. Not every attorney will be the right fit, so it’s best to speak with a few before deciding.
As a business owner, it’s wise to be proactive because this scenario could be in your future. The best way to do so is to keep your employee records accurate and up to date. That way, if you receive a request for information, you won’t have to backpedal to assemble what you need and risk making an error that could land you in trouble.
Divorce matters are legal matters that courts take seriously. Therefore, if you become part of an employee’s divorce proceeding by virtue of being the business owner where they’re employed, it’s best to check with an attorney about your obligations and cooperate once you understand them. Not only will this save you time in the long run, but you also won’t risk getting yourself in hot water with the court and being scrutinized more than you would’ve been had you cooperated.
While you may want to support your employees, it’s best to not overly involve yourself in matters that don’t concern you more than they do. Having compassion and empathy is one thing; putting yourself, your business and the people who work there, as well as your livelihood, on the line is another.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.