| When should I use an employment agreement? | | | | continuity and provide value to potential |
| Employment agreements may not be appropriate | | | | purchasers? |
| for every employee in your business – | | | | Employment agreements document the role of |
| generally, they should be reserved for employees | | | | personnel necessary to operate a successful |
| occupying key management or sales positions, or | | | | business. Once created, descriptions and |
| persons having access to the most sensitive and | | | | compensation schedules can be reused as new |
| valuable information and processes used by the | | | | employees fill vacant positions or positions created |
| business. Because employees serve "at-will", an | | | | during times of expansion. |
| employer can terminate the relationship at any | | | | Confidentiality clauses requiring employees to |
| time for any reason or no reason at all (except | | | | protect e sensitive business information and trade |
| for certain discriminatory or retaliatory reasons | | | | secrets from disclosure put employees on notice |
| provided by state and federal law), employment | | | | that it is the employee's job to promote the |
| agreements are not necessary for lower paying | | | | businesses best interest by protecting the |
| or general administrative positions. | | | | information that produces revenue or that gives |
| The prudent business owner, however, should | | | | the business a competitive advantage. Properly |
| present employment agreements to key staff. | | | | protected information through thoughtful systems, |
| Maintenance of these agreements 1) reduce | | | | procedures and agreements provides lasting value |
| future conflict over perceived expectations, 2) | | | | to a business. Prospective purchasers (and their |
| promote continuity of processes and systems, 3) | | | | legal and financial counsel) are impressed by a |
| provide value to potential purchasers of the | | | | business that has invested in a workforce that is |
| business and 4) provide strong negotiation | | | | aware of and adheres to policies and procedures |
| positions in the event of employee misconduct or | | | | that safeguard the integrity of the business. |
| an overt assault on the intangible valuables of a | | | | How do employment agreements protect |
| business. | | | | intangible values? |
| How do employment agreements reduce future | | | | Much like confidentiality clauses, non-competition |
| conflict? | | | | and non-solicitation clauses in an employment |
| A properly drafted employment agreement | | | | contract protect the viability of a business. Key |
| clearly spells out an employer's expectation of its | | | | personnel have access to important information |
| employee's performance and the employer's | | | | which could be used to gain a competitive |
| financial obligations to the employee. Every | | | | advantage over the business. Non-competition |
| employment agreement should list the employee's | | | | clauses, contrary to popular belief, are |
| job description in detail, while allowing flexibility for | | | | enforceable. Non-competes that are drafted to |
| the needs of the business. The agreement | | | | include only what is necessary to protect the |
| should also discuss the employee's compensation | | | | business, coupled with proper procedural |
| and benefits in a manner that is clearly | | | | formalities, are effective tools to protect the |
| understood by each party and should be simple to | | | | business from being dismantled piece by piece by |
| reduce to a mathematical formula, particularly in | | | | a former employee. Likewise, non-solicitation |
| the area of bonuses and commissions. Many | | | | provisions can cover a restriction on former |
| claims against employers arise from non-payment | | | | employees from bringing co-workers or |
| of bonuses and commissions thought due by the | | | | contractors with them in a new business |
| employee. Thus, this section should be capable | | | | enterprise. |
| of simple interpretation by persons only casually | | | | Added up, these restrictions can create the legal |
| aware of the business' internal functions. | | | | barriers to entry necessary to protect the |
| Lawsuits over compensation can be avoided early | | | | business – and at the very least can allow the |
| if these provisions are clear. | | | | business ample time to transitions its most |
| How do employment agreements promote | | | | important positions to new hires. |