Having your employees sign agreements can help avoid future disputes between you, the employer, and your staff. They outline the most important aspects of working for your company and informs the employees what is expected of them through their employment. Every employer has unique needs, and employment agreements should be tailored to fit your business. Here are a few terms and provisions commonly contained in employee agreements.
It’s extremely important to include a “disclaimer” about an employee’s at-will status. At-will employment means the employment relationship can be terminated at any time, by either the employee or the employer, for any reason. If you omit this caveat, the employee may believe that they are signing a contract guaranteeing a job. This makes it very difficult to end their employment down the line, should it become necessary.
Confidentiality agreements, officially referred to as Non-Disclosure Agreements (NDAs), define what information or property is considered confidential and limits who the employee can share it with.
In almost every case, your employees should sign a confidentiality agreement. These terms can be as broad as you want, but in general they should 1) define what information the employee will have access to that is considered confidential, and 2) indicate that all “confidential information” will be kept confidential by the employee during and after their employment with your business.
Under U.S. copyright law, a “work made for hire” is a work subject to copyright that is created by an employee as part of their job. It is owned by the company, not the employee. If your business makes any kind of original work, you will likely need a work-for-hire provision in your employee agreements. By signing, the employee acknowledges that they will develop content (i.e. intellectual property) for your company, and that they will do so as part of their employment.
Should an employee leave your company, this common clause would prevent them from bringing (“soliciting”) any of your clients (and sometimes employees) with them. If your business works with only one or two clients, a non-solicit agreement could protect you from losing your customer base.
This is a tricky, continuously evolving area of the law. We strongly recommend you speak with an attorney before having your employees sign a non-solicit agreement to make sure it will actually be enforceable.
Non-compete clauses restrict where an employee can work after they leave the company. For example, a non-compete provision might state that an employee cannot then work for a competitor or work within a certain radius of their former employer. Along with non-solicits, these provisions are often called “restrictive covenants.”
Courts often find that non-compete provisions restrict fair trade and violate federal antitrust law. For this reason, non-competes are rarely enforceable. When they are, it is under very specific circumstances. It’s best to speak with an attorney about your specific situation.
Do you need an employee agreement for your business? Does your current agreement protect your interests? Are there loopholes or openings that leave you open to losses? Contact us today to make sure your bases are covered.