20 Nov Six Key Clauses You Need in Your Employment Agreements
While employment contracts are not generally part of the hiring process, in some cases a contract is necessary, especially if you are hiring an elite employee with skills that your business needs in order to have an edge over a competitor.
Written contracts are especially useful if you want to ensure that your employee stays a part of your business for a specific period of time based on the costs of training a replacement. A contract can lock in the employee for a specific term, with a penalty in place for leaving early, and can determine how much notice he or she must give so you can train a replacement in a timely manner.
Contracts are also important when employees will be working with sensitive or confidential business information. A contract can include a confidentiality clause that ensures that the sensitive information remains confidential and isn’t later used by the employee for his or her benefit.
Non-compete clauses are also often used in employment agreements. Such clauses can prevent an employee from leaving your business to work for a similar company, another way to protect your confidential business information. However, these clauses are unenforceable in California, so you might be wasting your time in making your employees sign one to begin with.
If you are attempting to lure a great candidate to work for you rather than a competitor, a contract that offers job security, benefits, and other perks will serve as additional enticement beyond salary and your business environment.
While an employment contract should clearly detail the job, as well as the salary that it comes with, there are other aspects that a contract can cover, including:
- The length of the job, especially if it is a short-term contract.
- Benefits, including health insurance, disability and sick time, vacation time, and other perks.
- Grounds for termination.
- A confidentiality agreement. If you are working with sensitive information, this is especially important and offers protection for your list of clients, trade secrets, and other restricted business information.
- Ownership of the products the employee will be working on, especially in the case of ghostwriting or product development.
There Are Disadvantages to Employment Contracts
While it may seem that employment contracts are one-sided, there are times when you may regret signing on the dotted line. If at some point you want to change the terms of an employment contract, the employee will have to agree to new terms, and if he or she does not, you would be locked into the original agreement or face legal action for breaching the contract.
Contact a California Employment Attorney
If you’re putting together a contract between your business and an employee, an experienced attorney can help ensure that you’ve covered all aspects of the job situation and are protecting your business interests properly. For more information on employment contracts, contact Fernald & Zaffos today.