Employees are a valuable asset. In many businesses, they are the most valuable asset.
In some industries, employment contracts are normal and expected. They can be beneficial to an employer if properly constructed. While your employee gets certain protections for their job, you can ensure protection for your business and its secrets.
These are a few terms that employment contracts tend to miss.
Type of agreement
Choosing the correct type of agreement would seem like a simple part of the task; however, there are many types of contracts where workers are engaged, including:
- Freelance contracts
- Independent contractor agreements
- Full or part-time employment contracts
- Consulting agreements
As you consider the type of agreement you need for your employees, think about what they do, how they do it and what protections your business needs as a result. The IRS and states do not allow you to freely choose whether a person is a W-2 employee or a 1099 contractor. You must properly characterize the relationship or risk penalties or other consequences.
Misunderstanding employee rights and employer obligations
Employment law is complex. There are times when it may seem straightforward, but each rule has its own nuances.
When you decide what to include in an employment agreement, it is essential to know which laws apply, check all applicable laws and watch for updates. A contract that was consistent with law when it was drafted can quickly get outdated.
Striving for clarity
You cannot expect your employees to hold up their end of a contract if it is not clear. Some employers intentionally make their employment contracts vague to retain flexibility when a situation comes up.
When your employment contracts are clear, your employees will have a better understanding of your expectations, and your document will be more likely to be enforceable in a dispute.
Drafting employment contracts is challenging. It is important to get knowledgeable support so that your contracts cover all the vital aspects of the agreement.