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What business owners should know about employee contracts

by | May 18, 2021 | Business Law

As you grow your business, you likely will need to add employees to help you with your operations. At some point, you may add employees in essential management positions or you want to protect the relationship you have with key employees. This is when having an employee contract might be beneficial.

Why you might need an employee contract

You likely don’t need to create an employee contract with every employee you hire. However, in some situations, an employee contract may be essential. For example, you may want to have an employee contract when:

·       You hire you hire an employee who may be difficult to replace – someone who has specific skills or knowledge that would benefit your company and employees with those skill sets aren’t common in your area.

·       You have an employee who has knowledge of your company trade secrets or confidential information. You may want to limit that employee’s ability to leave your company and taking that knowledge with them. You also may want to have them sign a confidentiality agreement not to divulge the sensitive information they know to someone outside the company.

·       You want to avoid having a key employee work for the competition. You may want to add a noncompete agreement clause as part of your employee contract, limiting your employee’s ability to quickly take a position with a competitor and putting your business at a disadvantage as a result.

·       You want to protect your client list and avoid having an employee take important client information with them when they leave your company.

·       You want to avoid having an employee advertise they have moved to another position with a different company, in an effort to prevent them from taking important clients with them.

Getting help creating an employment contract

You always should have an attorney familiar with employment law review an employment contract or noncompete agreement before having an employee sign it. You want to ensure your contract is enforceable and protects your business well.

Running your own business involves a lot of time and effort. By getting help when you need to create an employee contract, you likely can save yourself from facing problems down the road if you need to enforce the contract’s terms and protect your business interests.

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