Incentive Pay on Trial: Drafting Commission, Bonus, Retention and Clawback Provisions That Survive State Wage Laws and the Restrictive Covenant Bans and Limitations

Daniel G. Prokott, Partner | Faegre Drinker Biddle & Reath LLP

Daniel Prokott is a nationally recognized employment law partner at Faegre Drinker, where he leads the firm’s global HR Compliance, Training, and Transactions team. He advises employers of all sizes—from multinational publicly traded corporations and established private enterprises to emerging businesses and nonprofit organizations—on sophisticated compensation structures, restrictive covenants, and workforce management in an increasingly complex legal landscape. A sought-after authority on drafting enforceable incentive pay provisions that navigate state wage-and-hour laws and evolving restrictions on noncompete agreements, Mr. Prokott brings litigation-tested expertise to the design of commission, bonus, retention, and clawback provisions that withstand legal challenge while advancing business objectives.

• Education & Credentials

Mr. Prokott earned his J.D., magna cum laude, from Mitchell Hamline School of Law, where he served as Law Review Editor-in-Chief, reflecting his distinction as a legal scholar and careful drafter. He earned his B.A., summa cum laude, from the University of Minnesota, Duluth, demonstrating sustained academic excellence throughout his legal education. Mr. Prokott clerked for the Honorable James Gilbert of the Minnesota Supreme Court (2001-2002), where he gained deep insight into how courts interpret employment agreements, restrictive covenants, and compensation disputes. He is admitted to practice in both Minnesota and California, positioning him uniquely to advise clients on multi-state incentive compensation programs that must survive scrutiny under the wage-and-hour regimes and restrictive covenant bans of multiple jurisdictions.

• Recognition & Leadership

Mr. Prokott is widely recognized as a leading authority on employment compensation, restrictive covenants, and workforce management. He has earned recognition in Chambers USA for Minnesota Labor & Employment (2021-26) and is listed in Best Lawyers® for Employment Law – Management (2021-27). He was recognized as a Minnesota Super Lawyer in 2024 and received multiple “Rising Star” designations (2005, 2007, 2009-16). Clients and peer reviewers consistently praise his ability to translate complex legal constraints into practical, business-minded compensation structures that advance company objectives while minimizing liability exposure. He is frequently quoted in national publications and media outlets on employment law developments, restrictive covenants, wage-and-hour compliance, and executive compensation strategies. His practical approach—grounded in litigation experience and real-world business understanding—makes him a trusted advisor to HR leadership and general counsel navigating the tension between competitive compensation and legal compliance.

• Professional Involvement

Mr. Prokott is deeply engaged in the labor and employment legal community. He served for eight years (2013-20) as a Governing Council Member of the Labor and Employment Section of the Minnesota State Bar Association, including service as Secretary and Treasurer (2017-18), Vice Chair (2018-19), and Chair (2019-20). He also served as Co-Chair of the Minnesota State Bar Association’s Civic Education Committee (2009-12), reflecting his commitment to legal education and public service. His professional leadership positions him at the forefront of emerging employment law trends, particularly on issues of wage-and-hour compliance, restrictive covenant enforceability, and executive compensation in the multi-state environment. He maintains active involvement in continuing legal education, regularly serves as faculty for accredited seminars, and is a frequent speaker at state and national bar association events.

• Experience

Mr. Prokott’s practice encompasses the full spectrum of employment law matters that affect compensation design and enforceability. He advises employers on drafting and implementing executive and sales compensation agreements—including commission structures, bonus plans, retention incentives, and equity-based compensation—with particular focus on ensuring compliance with state and federal wage-and-hour laws, including the Fair Labor Standards Act (FLSA), state wage payment laws, and emerging restrictions on clawback provisions. His expertise extends to preparing and drafting non-competition, non-solicitation, confidentiality, and employee mobility provisions, with deep knowledge of enforceable restrictive covenant design in Minnesota, California, and across multiple jurisdictions as noncompete bans have proliferated.

His consulting practice advises employers on: (1) structuring incentive compensation that survives wage-and-hour audits and litigation; (2) complying with complex clawback requirements under Dodd-Frank, SEC rules, and emerging state clawback laws; (3) designing commission and bonus plans that account for state-specific definitions of “wages,” “earned compensation,” and “forfeiture” restrictions; (4) navigating the enforceability constraints created by expanding noncompete bans and “garden leave” requirements; and (5) litigating compensation disputes, including commission and bonus claims, in state and federal court. He regularly conducts FLSA audits assessing employer exposure under wage-and-hour laws and advises on remediation strategies. His recent published work and presentations address the practical challenges of drafting incentive pay provisions that withstand challenge under California’s strict wage-hour and restrictive covenant regimes while remaining competitive for attracting and retaining executive and sales talent.

Throughout his career, Mr. Prokott has drawn upon years of litigation experience to better advise on compensation design and risk assessment. By understanding how compensation agreements are questioned by employees and their counsel in court and before administrative agencies, he brings a litigator’s perspective to preventative counsel—identifying ambiguities, enforceability challenges, and compliance gaps before they result in costly disputes. His multi-state experience and deep familiarity with California employment law—one of the most restrictive regimes governing both wage-and-hour matters and restrictive covenants—enable him to advise clients operating across multiple states on compensation structures that work within the legal constraints of the most demanding jurisdictions.

Kristin M. Halsing, Associate | Faegre Drinker Biddle & Reath LLP

Kristin Halsing is a skilled employment counsel at Faegre Drinker with deep expertise in the complex and frequently evolving laws governing compensation, employee mobility, and restrictive covenants—particularly in California, a jurisdiction that sets the strictest national standards for wage-and-hour compliance and noncompete enforceability. Ms. Halsing advises employers of all sizes across diverse industries on compensation design, restrictive covenant strategy, and multistate employment compliance. She combines sophisticated legal knowledge with practical, business-minded advice grounded in her experience litigating high-stakes employment claims. Her particular strength lies in translating the intricacies of California’s restrictive compensation and restrictive covenant laws into concrete, compliant implementation strategies that do not sacrifice competitiveness.

• Education & Credentials

Ms. Halsing earned her J.D. from UCLA School of Law (2017), a top-tier institution known for rigorous training in employment law and commercial law. She earned her B.A. in Government, cum laude, from Georgetown University (2011), where she demonstrated strong analytical and writing skills that inform her careful approach to employment agreement drafting. During law school, Ms. Halsing served as a judicial extern to the Honorable Ming W. Chin at the Supreme Court of California—one of the nation’s most active courts in interpreting and applying California’s restrictive wage-and-hour laws and restrictive covenant statutes. This judicial clerkship experience provided her with direct insight into how California’s highest court applies compensation law doctrine to real-world disputes, positioning her uniquely to advise on provisions that will withstand appellate scrutiny. She is admitted to practice in California.

• Recognition & Leadership

Ms. Halsing is recognized as a skilled and knowledgeable employment counsel, particularly on California employment law issues. She has been recognized on the Faegre Drinker Pro Bono Honor Roll (2020-21, 2024-25), reflecting her commitment to public service and legal excellence. She is a frequent author and speaker on California employment law developments, California wage-and-hour compliance, and the evolving landscape of restrictive covenants in the post-FTC noncompete ban era. Her published work includes analyses of California’s restrictive wage-and-hour laws, state sick leave requirements, paid family and medical leave legislation, and the enforceability of noncompete agreements and other restrictive covenants under California law. Her commentary appears regularly on employment law news and analysis platforms, and she is a sought-after speaker at continuing legal education programs addressing California-specific employment compliance.

• Professional Involvement

Ms. Halsing maintains active involvement in the employment law community through speaking engagements, webinar presentations, and written commentary on emerging legal developments. She has been a featured speaker at continuing legal education programs addressing California employment law, including presentations on “California Calling: New California Laws for 2024 and Beyond” and webinars on “Navigating the Patchwork of Paid Family and Medical Leave Laws” and the “FTC’s Abandonment of the Noncompete Rule and Renewed Focus on Individual Enforcement Actions.” She regularly contributes to the LaborSphere blog, a resource providing coverage and insights on breaking employment law cases, recent legislation, and emerging legal issues affecting employers. Her writing and speaking reflect her commitment to helping employers navigate California’s complex and evolving legal landscape.

• Experience

Ms. Halsing provides strategic counsel to employers across a comprehensive range of employment law matters, with particular focus on compensation design and restrictive covenant strategy in the California and multistate context. She advises clients on: (1) compliance with California employment and labor laws, including wage payment laws, overtime requirements, and wage theft statutes; (2) federal, state, and local wage-and-hour laws, with expertise in FLSA classification issues, overtime calculations, and state-specific wage minimum and overtime rules; (3) complex multistate employment policies, particularly regarding sick leave, time off, leaves of absence, and paid family and medical leave requirements; (4) employee and independent contractor classification issues; and (5) noncompetition, nonsolicitation, and other employee mobility and restrictive covenant provisions, with deep knowledge of California’s heightened scrutiny of such provisions.

Her counseling extends to the full employment lifecycle: hiring and onboarding practices (including drug tests, background checks, and arbitration agreement considerations); workplace restructuring and reductions in force; internal and external employment-related investigations; complex terminations and separations; performance management; and employment-related concerns in corporate transactions, including mergers and acquisitions. Ms. Halsing is particularly well-versed in the intricacies of compensation-related disputes—commission, bonus, and incentive pay claims—and leverages her litigation experience to provide practical risk assessment and business-minded advice to clients facing complex compensation controversies.

When counseling clients, Ms. Halsing relies on her litigation experience with high-stakes employment claims to provide practical, forward-thinking advice. She understands how compensation disputes unfold in litigation and how courts will interpret ambiguous incentive pay provisions, clawback language, and restrictive covenants. This litigator’s perspective informs her counsel on compensation design, helping clients identify enforcement risks early and draft provisions that clearly express intent and withstand legal challenge. Her expertise in California compensation law—and her understanding of how that law applies across multistate compensation programs—positions her as a trusted advisor to employers designing incentive pay structures that must function across multiple jurisdictions with varying wage-and-hour requirements and restrictive covenant restrictions.

SESSION 1 – The Commission and Bonus Plan: Drafting “Earned” So It Holds Up in 50 States | 12:00pm – 1:00pm

Most commission and bonus disputes are lost in the plan document or individual contract, not the courtroom. This session shows attorneys how to effectively draft the earning event, payment timing, chargeback and termination provisions so they work under the state wage-payment laws that decide these cases, including the written-plan and signed-acknowledgment states, the procuring-cause and post-termination commission rules, and the jurisdictions that convert an unpaid or delayed commission or bonus into a penalty-and-fee claim. The presenters walk through clause-by-clause language for earned versus contingent amounts, lawful clawbacks for cancellations and non-payment, discretionary versus nondiscretionary bonuses, and how to change a plan mid-year without creating a breach or wage claim. The session closes with the FLSA overlay for nonexempt employees earning incentive compensation, where formulaic commissions and bonuses flow into the regular rate.

BREAK | 1:00pm – 1:10pm

SESSION 2 – Retention Money and Forfeiture Clauses: Building the Noncompete Substitute Without Buying a Wage Claim | 1:10pm – 2:10pm

When the noncompete is gone, employers reach for pay-based retention: sign-on and stay bonuses with repayment terms, training-repayment provisions, equity and deferred-compensation forfeiture for joining a competitor, and executive agreements built around golden handcuffs. This session explains when those tools are recharacterized as banned noncompetes under Washington’s HB 1155 and similar state statutes, when they collide with earned-wage protections in Minnesota, California and other states, and when they simply cannot be collected. Attendees will learn how to structure enforceable repayment obligations, revise executive and sales agreements for the new state rules, and manage the dispute when a high earner leaves: the demand letter, the unpaid-wage counterclaim, treble damages and fee-shifting exposure, and the settlement math that decides whether to pursue, defend or walk away.