Many small businesses are discovering the advantages of using employment contracts when hiring key employees. These agreements between employers and employees set the conditions of employment and often include details relating to compensation, benefits, work hours, and job responsibilities. Employers can benefit from entering into employment agreements with executive employees and professional and administrative staff. Employment contracts can be particularly helpful in providing protection for sensitive matters, limiting competition with other companies, and retaining important employees.
Employees may have access to proprietary information, including trade secrets, which employers may want to protect from widespread distribution. Employment contracts can specify the confidentiality of certain information and limit the disclosure of this material. With an employment agreement, employers also can specifically control what information an employee can use if they leave the company.
Intellectual property created by an employee on behalf of a company can be protected by ensuring through an employment contract that the business, and not the employee, owns the copyrighted or trademarked material. The use of an invention assignment clause is another important way to protect a company’s intellectual property assets. This type of contract provision specifies a company will own any invention created by an employee using the company’s equipment, facilities, trade secrets, supplies, or other resources.
In many industries, it remains a good business practice for employers to limit competition by restricting where former employees may work in the future. Employment agreements can contain non-compete clauses, in which an employee agrees not to work for a competitor over a certain period or within a certain geographical area. Another common clause used in these contracts is a non-solicitation agreement, which requires the employee to agree not to solicit future business from the employer’s customers or other company employees.
By having uniquely qualified employees sign employment contracts detailing incentives for ongoing employment, employers often retain these individuals. Employment contracts sometimes list details regarding how termination of employment will be handled. Some employers include at-will clauses, allowing either party to end the relationship at any time.
Term and conditions typically found in employment agreements include the identification of the parties, effective date of the contract, description of the type and term of employment, responsibilities and duties of both parties, details related to how notices of action will be made, ongoing job requirements related to professional licensure issues, work hours, and the method for handling future disputes. To ensure an employment agreement adequately protects the rights of all parties and complies with federal and state laws, employers should consult with an experienced business lawyer for assistance in drafting these documents.
Under certain circumstances, employee handbooks or an exchange of letters between an employee and employer during the hiring process can be found to be an informal contract.
With offices conveniently located in West Chester, Pennsylvania, the experienced Philadelphia business lawyers at MacMain, Connell & Leinhauser represent businesses and employers throughout Philadelphia and Chester County, Pennsylvania. To schedule a confidential consultation today, call us at 484-318-7106 or submit an online inquiry form.