Step Up Your Startup: Critical Employment Contracts to Keep In Mind As You Grow Your Business
Starting or growing your own company can be exciting, but it’s critical to have certain agreements in place to protect yourself and your business.
When welcoming new staff on board, whether it’s the first person you’re hiring or if you’re bringing them onto an already established team, it’s important to have specific documents prepared. Here’s how to make sure each employee you bring on knows what is expected of them and how to plan ahead if you and your employee decide to part ways.
In most cases, it’s essential to have an initial agreement that outlines all the basic terms of someone’s employment. A good employment contract or offer letter will discuss the new employee’s role, expectations, compensation, and other details. Some agreements may specify a term of employment (e.g., three years) while others may state that the employee is an “employee at will” who may be terminated at any time. The specifics of the agreement will vary depending on your business needs, but it’s important to have these terms agreed to in writing early on, to ensure a mutual understanding between you and your new employee.
INDEPENDENT CONTRACTOR AGREEMENTS
It’s essential to know the difference between an employee and an independent contractor. A common, and costly, mistake many employers make is confusing the two.
An independent contractor is generally someone who is in business for themselves and operates free from supervision, direction and control in the performance of their duties to your company. Having a written agreement that lays out the terms of an independent contractor’s services to your company is critical. Misclassifying an employee as an independent contractor is a serious error than can have expensive repercussions. Knowing the key differences and making sure to have contracts for both will give you greater protection in the end.
Employee handbooks are great tools for employees to have. A handbook should state your company’s policies, permitted and prohibited behavior and a description of the company’s mission. Besides the rules of your company, a handbook also gives insight into your company’s goals, essential core values and what employees should expect going forward.
Employers always hope for the best, but sometimes things don’t work out that way. If any disputes arise in the workplace, it’s convenient to have a handbook that clearly lays out the proper steps to take towards resolution.
Lastly, make sure each employee signs the handbook. It’s good practice to make sure employees understand and acknowledge the company’s policies and expectations of employees.
INTELLECUTAL PROPERTY AND INVENTIONS
Proprietary information and intellectual property are important assets of a company. It’s critical to specify who owns these assets. Employers are encouraged to have a Proprietary Information and Inventions Assignment Agreement (or PIIAA). Employers should at least include some PIIAA provisions in their employment documents to ensure that intellectual property and other proprietary information created by employees are considered “work-made-for-hire” or otherwise assigned to the employer.
NON-SOLICITATION AND CONFIDENTIALITY AGREEMENTS
No matter what industry your company is in, you may want to have a non-solicitation and confidentiality agreement in place. With these documents in place, there shouldn’t be any issues with fighting over clients, contact information, confidential information, trade secrets, or future business opportunities, when an employee leaves your company. Having a thorough, but reasonable, non-solicitation and confidentiality policy will make clear what an employee can and can’t do with your client base and proprietary information after they leave the company. Traditionally, many companies also required employees to sign non-compete agreements. Many states have cut back on the enforceability of these provisions and laws governing non-competition clauses vary from state to state.
SEEK ADVICE TO KEEP CURRENT ON EMPLOYMENT LAWS
An experienced employment attorney can help draft all of the above employee contracts. It is important to frequently review these agreements on a yearly-basis, as employment laws are always changing, whether by newly enacted federal and state statutes as well as by key case decisions. The Romano Law employment team is ready to help. Please contact us for assistance.
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This Blog is made available by Romano Law PLLC for general informational and educational purposes only, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and Romano Law PLLC or any individual contributor. You should consult a licensed professional attorney for individual advice regarding your own situation.