An employment agreement is a document which delineates the terms of the relationship between an employer and employee. If you are hiring a new employee, this document can help form a solid foundation for your business relationship. The document will specify expectations for both parties and may include items such as terms of conduct, employee benefits, vacation time, medical leave, hours, and other issues that may be up for consideration, depending on the business' needs.
Once signed, an employment agreement is a legally binding contract that can be enforced in a court of law. Often an employer or company makes their offer of employment contingent on an employee signing the agreement.
FEATURES OF EMPLOYMENT AGREEMENT
1. NON-COMPETE CLAUSES: One common feature of an employment contract is a covenant not to compete, also known as a non-compete agreement. If you're considering including a non-compete provision in an employment contract, you should understand what is, and what isn't, enforceable. Non-compete clauses typically restrict an employee -- post-employment -- from working for a competitor for a certain period of time. Typically, these clauses also restrict an employee from working for a competitor within a specific geographic area.
2. CONFIDENTIALITY: Confidentiality clauses are also commonly found in employment contracts. These clauses may encompass a variety of things, such as trade secrets, business operations, marketing strategies, and client lists. For example, if your business is highly unique to the extent that disclosure of your processes or trade secrets would lessen your market advantage, adding a confidentiality clause would be in your best interest. Generally, when an employee agrees to a confidentiality clause, he must refrain from sharing protected information during and after employment.
3. WORK PRODUCT AND TERMINATION: Clauses that address ownership of work product are also common features of employment contracts. If your employees invent products within the scope of their employment, you can take ownership of these inventions by including a clause that expressly states your intention to do so. Moreover, you may also include a provision that sets out grounds for termination. For example, you can make a violation of the contract's terms grounds for termination.
4. CONSIDERATION: Because employment contracts are like other contracts, you and your employee are bound to the terms. For example, if you promise to offer health insurance in an employment contract, you must do so. Otherwise, you'll be in breach of the contract. Lastly, careful construction is required regarding non-compete clauses. If a non-compete clause is so broad that it effectively renders an employee unemployable, it will be extremely difficult to enforce. The law varies by state; however, most courts find a time duration of six months to one year enforceable. A non-compete that restricts an employee from working within the same industry throughout the country is unreasonable and likely unenforceable.