If we’ve learned one thing from TV shows about crime and the law, it’s that employers should always include formal employment contracts to new employees.
While contract law isn’t the sexiest topic, viewers of LA Law to Law and Order know that employers who oversee this detail will pay for it. And don’t think for a moment that all those would-be Apprentices—celebrities and otherwise—haven’t been given employment contracts.
Even Apprentices on TV are required to sign employment contracts.
Employment Contracts Spell Out Protections Employers Need!
An employment contract is a document that both you and your employee sign that dictates the terms of your working relationship. It gives both parties the opportunities to see everything in writing that applies to a job. A written employment agreement can avoid a lot of miscommunication and ensures the contract accurately reflects both parties’ intentions and expectations.
Still, employers need to be very cautious about providing employment agreements. Many have unwittingly discovered later on that they unwittingly bound themselves to promises that weren’t intended and aren’t in the best interests of the business. For this reason, it’s a good idea to engage an employment attorney to review employment contracts, particularly after a busy legislative session in state capitals.
As a general rule, most employees in middle management or lower do not need employment contracts. They are useful when hiring higher-level employees or employees who have access to sensitive client information or client relationships. Certain sales and marketing personnel may also need formal employment agreements. An employment attorney can help you determine when employees should sign employment contracts.
What to Include in Employment Contracts
As an employer, you should be aware of different factors to consider when creating an employment contract. Make sure it operates in your best interest and under terms you, as an employer, can legally seek.
Here are items you’ll see in most employment agreements:
The term of employment (months, years, until the completion of a project, or indefinitely, etc.) Since Arizona is an at-will state, Arizona employers should consult an employment law office before incorporate this term into an employment contract.
Vacation and sick day policies
Reasons and grounds for termination
Non- compete covenants that limit the employee’s employment opportunities if he or she is terminated or otherwise leaves the company
Nondisclosure agreements relating to your company’s trade secrets or client lists
An ownership agreement stating that all materials produced by the employee during his employment are owned by the company
Assignment clauses stating that any patents procured by the employee during his employment must be assigned to the company
A method for resolving disputes such as mediation or arbitration
A good employment contract will spell out the parameters of the job, or what exactly you expect each employee to do. It should also state and what your employee can expect from you. It should address how to handle violations of the employment agreement and what you, the employer, consider to be a breach of contract.
Finally, keep in mind that employment in Arizona is generally presumed to be at-will. This permits the employer or the employee to terminate the employment relationship at any time, with or without cause or reason. A written contract or other evidence against the at-will provision can override this and specify that an employee can only be terminated “for cause.”
There is no requirement that you have to enter into a written employee contract with every employee. If you do decide to use written employee agreements, it is much easier and far less expensive to do things correctly from the start than to try to fix errors down the road.
Contact our office for a consultation before you enter into any agreement with your employee(s) so that we may help you draft an appropriate employment contract that meets your business’s needs.