Employment contracts have become a hot topic in the last few years, especially after President Joseph R. Biden directed the Federal Trade Commission to “address agreements that may unduly limit workers’ ability to change jobs.” There is no doubt that some organizations have required employees to sign non-compete agreements that have been needlessly controlling, but that does not mean that all employment contracts are unreasonable or unnecessary. The key is to know when they are appropriate and in crafting a contract that is fair to all.
There are many situations where it makes sense for both employees and the employer to make use of contracts that spell out the specifics of a job, including the employee’s responsibilities, the job’s intended duration (particularly if limited), the benefits and compensation to be provided, and the grounds for termination. A comprehensive employment contract will be specific about protecting trade secrets and the limitations placed on the employee once they leave the business, about ownership of work products, and about dispute resolution or mediation if required. An agreement that includes all of this information is essential if the employer needs to control the employee’s actions after they leave, especially if they are concerned about intellectual property or competition.
It is important to remember, however, that there are situations where an employee who has an employment contract has the ability to use its terms against the employer. Every contract is an agreement between two parties, and though an employer may present an employee with a contract to sign with the intention of protecting their business interests, it also must contain terms that protect the employee’s interests.
For example, if a contract specifies a duration of employment and you terminate the employee before the time period ends, that could represent a breach of contract for which your business can be held accountable. Unless your contract also spells out your rights to terminate based on a specific set of circumstances that you can prove, you may find yourself regretting having such an agreement in place.
Businesses that feel the need to use employment contracts are well advised to consult with experienced professionals who can both craft a fair and legal agreement and advise them as to when it should – and should not – be used. To set up a time to discuss your own needs, contact our knowledgeable attorneys today.