Elements to Include in Employment Contracts

If you’ve decided to draft up employment contracts for your startup’s new hires, there are a number of elements you should include and spell out in the agreement — most problems with employees stem from terms of employment that are not clearly defined. Off the bat, you should at least spell out the job requirements and goals. Many startup founders who are dissatisfied with their employees’ performance often find that they never really communicated to the employee the responsibilities or the standards for success for the position. You may also want to include when they will be required to be in the office (and a telecommuting policy, if allowed). These should be clearly spelled out so that not only does the employee have a clear idea of what is required of them, but that it can also be clearly identified when said employee is not meeting their requirements or goals. Other terms to include in employment contracts are: 1) Compensation and benefits: State not only the salary or wage, but also bonuses and raises (if any), as well as benefits such as insurance or stipends, and the vacation/sick days policies. 2) Tech and social media policies: Tech policies may include a bring-your-own-device policy, if your company is run that way, or if you provide technology to employees, how and when they may access and use it, or access and use work email and applications (this may be particularly important for workers paid on hourly wage, as access after-hours may implicate overtime wage laws). You may also want to implement a social media policy if you encourage or allow employees to use social media on behalf of the company — but be mindful of federal labor laws that prohibit employers from restricting employees from collective activity via avenues such as social media. 3) Confidentiality and post-employment covenants: Particularly with startups, you may want to ask employees to execute non-disclosure agreements, as well as post-employment restrictive covenants such as non-compete, non-solicitation (employee cannot solicit clients of the company), and no-hire agreements (employee cannot hire other employees of the company). Non-compete agreements must be limited in scope as to industry/job, geography, and time (and cannot necessarily be slapped on every employee, as they can only protect the company’s interest while not heavily infringing on the free movement of employees. Non-soliciation and no-hire agreements are limited as to time — non-disclosure agreements must also describe with some specificity the material or information that is confidential. If such agreements are to be used, they should ideally be executed upon the offer of employment, as mere continued employment has often not been held to be sufficient consideration for such agreements. 4) Termination and dispute resolution: You should also identify the grounds and terms for termination of employment (it helps to spell out the responsibilities and goals of the position, so that failure to meet them can be grounds for termination). And in the event of a dispute (whether it be over termination or anything else) you may want to set a particular forum for resolution, such as mediation or arbitration, or selecting the courts or laws of a particular state for resolution of a dispute.

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