If you are a business owner and you are ready to hire employees, it is important to confer with legal counsel and ensure that your employment agreements comply with the law. An employment contract with your key employees should outline all of the duties and obligations of the employee and employer. Having the details of the employment relationship set forth in writing can help ensure that there are no misunderstandings or lawsuits in the future.
If you decide to use employment contracts, they should be tailored toward meeting your business’s specific needs as well as covering the job position. Below are a few considerations:
- The employee’s salary, hourly wages, bonuses and commissions should be detailed in the agreement.
- The contract should cover the hours the employee will be required to work, including whether or not the employee can work remotely or if all of the job duties should be performed in the office.
- If the employee will be given equity in the business, the terms should be set forth clearly in the contract. This means covering topics such as the type of stock that will be given, exercise price, vesting term and the options for acceleration.
- The employee agreement should outline any benefits that will be provided to the employee. This includes 401k or pension programs, medical insurance, vacation time, sick leave, and other similar benefits of employment. The contract should specifically detail any requirements that must be met before the benefits are effective.
- Key employees should be required to execute a non-disclosure agreement (NDA). You can have a NDA as part of the employment contract or as a stand-alone contract. For more information about NDA’s, please read our blog titled “The Importance of a Non-Disclosure Agreement.”
- In most cases, the agreement should state that employment is “at will.” This means that the employee or employer can terminate the relationship with or without cause. Otherwise, the terms of employment should be clearly detailed as well as the grounds for termination.
- The employer should also consider including a covenant not to compete for a reasonable period of time after the employee stops working for the business. You should confer with legal counsel regarding the covenant not to compete.
If you are interested in learning more about drafting solid employment contracts, contact the legal team at The Swenson Law Firm for assistance.