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Contracts bring certainty to an employment relationship. Although you can have an employee manual (which you don’t want to be considered a contract) and policies, a contract can be customized for the individual. It makes it clear what both sides should expect.
Some “do’s” to consider when thinking about a contract for an employee includes:
- Clear and precise language: Avoid ambiguous terms and “legalese” that can lead to misinterpretation and misunderstandings. That being said, there may be terms you may want to leave more open because no one can predict the future. You’re writing to communicate, not to show how complicated you can make things
- Make the contract concise while covering essential issues: You want the employee to sign it. A 20-page contract may scare them off. You may be seen as a micro-manager ready to find a minor problem to justify their firing
- Define key terms: Clearly state their job title, duties, reporting structure, compensation, benefits, what will get the person a raise, and what may get them in trouble. Definitions are critical in contracts because they ensure both sides understand what’s being discussed
- Benchmarks: If the employee achieves something that will be rewarded, the goals and compensation should be stated
- Include employment type: State if the position is full-time, part-time, temporary, hourly, or salary
- Include the term: Is this contract for a set period? If so, include it
- Set probation and termination terms: Define probation period length and what’s needed to get past it. State potential conditions for termination, including notice periods, process, and severance
- Outline working hours and leave: Detail expected work hours, overtime policies, paid leave, sick leave, and holidays
- Confidentiality and non-compete clauses: Protect your interests while making what’s expected clear. Your confidentiality clause should be broad, but if you use a non-compete clause (it may be illegal in your state), you may be unable to enforce it if it’s too broad. Confidentiality should not only cover what shouldn’t be shared but who it shouldn’t be shared with
- Comply with employment laws: Don’t use a fill-in-the-blank contract. Your attorney should draft your contracts to ensure it’s enforceable and covers necessary employment law issues
- Address intellectual property ownership: Clarify you own the rights to any work-related creations and inventions
- Dispute resolution mechanisms: You may state that the employee agrees not to take disputes to court but agrees to try mediation to resolve them, and if that fails, the issue will be decided through arbitration
- Attorney review: State the employee has the ability and opportunity to have it reviewed by their attorney
There are many benefits to contracts for employers, but contracts are not one-way streets. You’re bound by them as well. Contractual provisions should not be taken lightly. Our Orange County, CA partnership dispute lawyer work for employees, too. Let Focus Law LA handle your legal concerns—contact us today for a consultation.
