What should you include in an employment agreement?

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As a business owner, you want to ensure that your employees are well taken care of and that everyone is on the same page regarding their job responsibilities. To ensure this, creating an employment agreement is crucial. 

An employment agreement outlines the terms of the employee’s role and rights, such as duties and wages. It should also include certain protections for you and your employee (e.g., non-disclosure agreements). What should you have in your contract so you can set your company up for success?

Job description and duties of the employee

Outlining the job duties early on in the process will help both parties better understand what tasks are expected from the employee. This eliminates any ambiguity associated with individual tasks and, as a result, any future disagreement about what was expected of the employee.

Wage and benefits

Any agreement should address specific details like salary or hourly rates, overtime regulations, bonuses or commissions, health insurance coverage, retirement plans, and other compensation-related matters. 

Non-disclosure, non-compete and other contractual agreements

Non-disclosure agreements provide assurance that confidential business information disclosed during the course of work is kept confidential. Furthermore, non-compete agreements ensure employers are not disadvantaged by employees leaving their company and entering similar industries. These provisions are common in many employment agreements but some states, like California, aggressively prohibit non-compete clauses and limit what non-disclosure provisions can address, so proper guidance in drafting such agreements is important.

Process for handling disputes or grievances

The employee agreement should outline what steps to follow if an employee has a complaint, such as when to involve supervisors or human resources staff. It should also provide instructions on submitting the grievance and specify timelines for resolutions or hearings.  But be cautious about including arbitration provisions.  Some states, such as California (again), seek to limit their application and they can actually increase costs for employers in certain scenario.

Having a law firm with experience in employment law on your side is vital to protecting your business. Contact us to learn how we can help you.