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For Employers: Employee Agreements Meant to Minimize Disputes – How Business Owners Can Use Them

A company should always be aware of the potential risks facing the business and take all necessary steps in order to minimize those risks that return. One of the best ways to do this is using employment contracts or employment agreements. These are legally binding agreements between an employee and an employer that lay out the duties of both parties and the terms of employment. These can assist a small business to keep quality talent, but it may also make the obligations that put a business owner at risk without the benefit of consulting with an experienced business planning attorney.

One of the most important things that’s covered in a typically business agreement is function. Small business owners frequently use these employments to get some form of protection that an employee such as a high-level person in a management role does not leave to identify another position while their contract is in effect. An employee who leaves out the training process, for example, can put unnecessary financial costs on the business. This is particularly true for more advanced positions like an executive where it can take a lot of time and energy to train the person to do the job the right way.

Small businesses can also have an advantage in getting the right talent by using an employment contract and outlining benefits. If an employee exits the company after finishing the agreement terms or breaks the agreement, employers may be able to add provisions that could forbid them from taking a job with a competitor, which can give you some peace of mind that things that they learn in your company will not be carried over elsewhere. Employment contracts are also extremely beneficial for preventing implied contracts.

In certain states, courts may recognize the existence of an employment contract as well as any reasonable benefits aligned with it, even if you do not have a formal agreement in place. If an employee tries to bring a legal action against you regarding an implied contract, you may be able to reference a written contract that guarantees only basic information such as an hourly rate, salary or a hiring date. Signing an agreement can give a great deal of flexibility to small business owners, but this should never be done without having an experienced attorney consult with you over the various benefits of using an employment agreement and the proper way to structure it.

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