Most employment in the United States is “at will,” and there is no contract involved. However, when employing high-level executives, professionals who work with trade secrets and other proprietary materials or hold other sensitive positions, a well-formulated employment contract provides important protections for your business.
Constructing an effective employment agreement requires a complex mix of knowledge and experience, including a thorough understanding of applicable state and federal laws and an understanding of the needs of your business. On the other hand, using a stock contract for every employee, particularly one that was not specifically drafted for the needs of your company, can create gaps in your protection, cause misunderstandings with key personnel, and even lead to litigation.
Working with an experienced employment attorney who can acquaint himself or herself with the special concerns of your business and integrate those considerations with legal requirements can offer a significant advantage.
Key Issues in Employment Contract Negotiation and Drafting
Of course, the specifics of an employment contract must be tailored to both the business and the particular employment relationship. Serious problems can arise when a business employs a form contract without carefully considering each of the provisions included and aspects of the employment relationship that are not covered. However, there are some core issues that must be considered when formulating an employment agreement, including:
- Compensation, including base salary, bonus structure, benefits and the circumstances under which compensation can be or must be adjusted
- Stock or other equity interests in the company, including timeline for vesting, circumstances under which options may be exercised and provisions for disposition on termination of employment
- The term of employment, including circumstances that will allow the company to terminate the employment relationship before the contract expires
- Duties, including any performance metrics that are key to successful fulfillment of the role, with sufficient flexibility for growth of the role
- Liability and indemnification issues, including whether and to what extent the company will provide insurance coverage or other protection for the employee against liability associated with the conduct of company business
- Confidentiality requirements and consequences for breach
- The employee’s affirmation that accepting the position does not violate any existing employment or non-compete agreements
- Conflict of interest issues and any restrictions on outside work, investments, charitable activities or other ventures
- Disposition of intellectual property rights, such as assignment of patents to inventions developed within the course of employment
- Non-compete provisions, including the specific industries and roles covered, geographic range and time period
- Dispute resolution mechanisms, including choice of state laws and any provisions for mediation or arbitration in advance of or in lieu of litigation
In some situations, these issues will be addressed in more than one agreement. For example, a company may draft a specific employment contract for an executive, but also ask that employee to execute standard documents such a non-disclosure agreements or restrictive covenants regarding future employment.
Our experienced business lawyers will work with your management team to develop the right combination of documents for your operation.
Drafting Employment Agreements
Our attorneys will work with your management team to identify any and all relevant issues for your employment contract and ensure that the language of your contract achieves your purposes and facilitates the success of your business while complying with all applicable law.
For those businesses that prefer to have their in-house legal teams take the lead on employment issues, we provide consultation to assist your company in:
- Drafting base agreements that can be used for certain categories of employee and adapted for higher-level or specialized positions
- Making adaptations on a case-by-case basis to ensure that the specific considerations applicable to a particular role or employment arrangement are fully addressed
- Reviewing contracts and advising when conflicts such as breach or possible separation arise
Whether you are in need of full service assessment of your employment contract needs, drafting of agreements, adaptation to particular positions and general guidance or simply supplementing your in-house legal team with employment-agreement-specific advice and review, we can help.
Talk to an Experienced Business Lawyer about Your Employment Agreements
Whether you are just starting a business, expanding, taking on a new executive or just reviewing your processes and ensuring that your contracts and other employment-related agreements are thorough and up to date, an experienced employment attorney can be your best resource. Protect your business from unnecessary ambiguity, litigation or even loss of intellectual property by working with one of our veteran business lawyers to create or update your contracts.