Employment Agreement & Contracts
Employment agreements (and contracts) help protect both the business and the employee, as well as add a professional tone right at the very start of employment
Employment Agreement & Contract, Employer / Employee Contract
Most employees are excited to show up to work for their first day, and first few weeks of employment. Employees, in general, need training and they need to be introduced to the business and their specific role. The first few days and weeks of a new employee are critical to cementing that employee’s long-term view of the business, and the tone from which the employer-employee relationship will forever last.
An employment agreement is an important tool in not just establishing a professional tone to the new employee, but it helps set expectations, establishes boundaries, and it creates protections for both employer and employee alike.
There are some general rules-of-thumb and guidelines to consider when hiring a new employee, and a properly executed and managed employment agreement is a valuable tool to the small business to:
- Clear up any ambiguities that may have occurred in the hiring process, such as bonus calculations, the possibility for equity, frequency of reviews, evaluations and pay raises.
- If the new employee will be generating any “works of art,” from a US Copyright perspective, make sure you include a general assignment of intellectual property.
- If you’re hiring a contractor, and that contractor will be generating any “works of art,” from a US Copyright perspective, it’s imperative your employment contract includes “Work Made for Hire” language.
- Include a non-compete clause (if allowed in your jurisdiction), if relevant or important to your business and the employee’s line of work.
- A non-solicitation clause is usually enforceable in most jurisdictions, and can help protect your client base and vendors, from exiting employees.
- If you are signing any non-disclosure agreements (NDA’s) with partners, vendors or customers, those NDA’s may require you to have your employees under a similar agreement, therefore an NDA provision in your employment agreement would be wise.
- If you have adopted the best practice of using “trade secret” language in your internal memos, documents, materials, etc, you should have a clause instructing employees how to treat “trade secret” information and materials.
- Reference general company policies, including benefits, holidays, PTO, etc, if you don’t have an employee manual, otherwise reference the employee manual.
- If the employee will be allowed to take company materials, documents, samples, inventory or equipment home or in their vehicle, the employee agreement should outline your expectations if something gets lost or stolen, insurance, safekeeping, and return upon termination of employment.
Just remember that it’s important to treat all employees the same, and therefore, make sure to have ALL employees sign your employment agreement (and yes, the terms or specifics can vary).
L4SB helps small businesses draft effective employment agreements.