As California business owners know, contracts are an essential part of doing business. Contracts can also be a crucial aspect of maintaining healthy and productive relationships with your employees. It is in your interests to ensure that your business contracts are strong, enforceable and work well for the objectives for your business.
It could be prudent to review what's in your contracts, or if you do not have employee contracts, consider the benefits of these agreements. Having a legally enforceable agreement with your employees can reduce the chance for problems, outline the rights and responsibilities of each party and make it less likely that a legal dispute will arise in the future.
Address the right things in your employee contracts
If it is in the interests of your business to have employee contracts, it is smart to ensure they address the right things. Accidentally leaving things out, including vague terminology or including contradicting terms in your contracts can lead to potentially costly and stressful disputes with disgruntled employees. It may be beneficial to address the following:
- How long the term of employment will last, whether it is indefinite or only for a limited amount of time
- The specific responsibilities of the employee while working for the company
- The number of vacation or sick days an employee has and how he or she uses them
- Any health care, insurance and retirement benefits available to the employee
- Grounds by which the employer can terminate the employee
- Outline of who owns any products, ideas or other things generated by the employee
- Details regarding non-compete clauses and nondisclosure terminology
What you need to include in your employment contract depends on what type of company you have, what your employees will be doing and the types of products or services you offer.
Protecting the long-term interests of your company
One of the most important steps you can take for your company is to avoid problems, not just solve them as they arise. One way to do this is by creating strong and enforceable employee contracts. This simple step will help avoid problems and give security to both you and your employees.
If you are unsure of the legal protections you may need for the benefit of your company, it can be helpful to start with looking at your employee contracts. A complete evaluation of your case can help you understand where you may need support and how to proceed.