Well-drafted, comprehensive contracts are essential to good business practices. This is no less true in the context of the employer-employee relationship. Strong, enforceable employment agreements can minimize the risk of liability and maximize employee productivity and morale. To ensure that your company’s best interests are being protected, it’s important that you hire dedicated legal counsel to handle all aspects of negotiating, drafting, reviewing, and executing your contracts. This is where SederLaw’s employment law practice team is ready to serve you.
What Kinds of Employment Contracts Do You Need?
Every business is different. Some only need a few different types of employment contracts to govern their dealings with employees, contractors, and others. Others need more complex agreements to manage not only the employer-employee arrangement but also to ensure that employees don’t engage in certain activities that can harm the business. When you retain our firm to handle your employment law matters, we can review different types of contracts with you, including:
- Permanent employment contracts: These are generally for full-time workers who plan to be in the company’s employment for an indefinite period of time. When properly drafted, these agreements are binding contracts between the employer and employee, enforceable in court.
- Part-time and seasonal contracts: Not all employees work full time or beyond a certain date, so part-time or seasonal contracts may prove useful. These are more limited in scope, meaning they don’t provide all of the same benefits as permanent employment contracts.
- Independent contractor and freelance contracts: If your business uses freelancers, contractors, or so-called 1099 workers, you will want to ensure that you do not inadvertently create an employment relationship with them. These agreements can accomplish this task.
- Non-disclosure agreements: Also known as an NDA, this restrictive employment contract prohibits employees from disclosing confidential company information. The objective is usually to protect such information as trade secrets and customer lists.
- Non-compete agreements: Another type of restrictive agreement, this contract limits an employee from leaving the employer and working for a competitor. Although these agreements are enforceable in Massachusetts, they must be carefully drafted and not overly broad.
- Non-solicitation agreements: An employee who leaves his or her employer may attempt to solicit other employees or customers to join in the new endeavor. A properly drafted non-solicitation agreement will prohibit this.
What Terms Should Be Included in Your Employment Contracts?
The exact terms that you need to include in your employment agreements will vary from one business and industry to another. Also, there will be differences among the different types of contracts. In general, however, employment contracts cover such matters as:
- Job duties: It should be clearly spelled out what the employee’s tasks are. If the job duties are well-defined, the employer would have grounds to terminate the worker for failure to perform. If these obligations are vague, however, termination could open the door to a lawsuit.
- Compensation: Include how much the employee will be paid in the contract. Related terms are compensation rates (e.g. hourly versus salary), frequency of payments, and methods (e.g. direct deposit or check). Bonuses, incentives, and the like should also be covered.
- Benefits: Employee benefits are major incentives that help companies draw the most talented workers. However, they can often be misunderstood and therefore trigger disagreements between the employees and the employer. Use precise language that addresses, if applicable:
- Health benefits such as medical, dental, and vision
- Life insurance
- Company stock options
- 401(k) or other investment and retirement plans
- Signing bonuses
- Relocation assistance
- Paid time off and vacation pay
- Nature and duration of employment: Is the worker full-time, part-time, seasonal? Defining the nature of the working relationship is especially important if the individual is an independent contractor. In any event, if a limited duration of employment or work is anticipated, then be sure to spell it out.
- Dispute resolution methods: In the event of a dispute between the employee and employer, a resolution method such as mediation can salvage the relationship and keep employer costs to a minimum. These methods should cover both employee grievances against the company and against other employees.
- Termination: Specifying the grounds of termination can make it much less likely that if you fire an employee, he or she will successfully sue you for discrimination or some other claim. For instance, a breach of company policies (covered below) could justify termination.
Include Policies and Procedures
Employers should make it abundantly clear what sort of conduct is expected of their workers. Unsafe, discriminatory, and unprofessional behaviors are just a few examples of matters that need to be addressed in a policies manual. On the other hand, procedures are necessary to ensure that any discipline meted out is fair to the employee (which lessens the likelihood of an employment lawsuit). For instance, there should be procedures to document complaints about employees, hold hearings with human resources, and impose corrective actions.
Policies and procedures handbooks are sometimes standalone documents, while other times they are included in employment contracts. Either way, employees should be required to read these rules and sign a document indicating they understand and accept them.
Contact Our Worcester Employment Contract Attorney
Regardless of which industry you are in or the size of your business, you need employment contracts to mitigate risks and help your company remain profitable. Find out why so many Massachusetts employers count on SederLaw for their employment law needs. Give us a call today to get started.
