4 Contracts Every Business Should Have Their Employees Sign

Contracts are a huge part of virtually any business. Contracts are used for inventory, supplies, and even routine maintenance. However, they are often overlooked when it comes to employment issues. Nonetheless, having employees sign certain contracts, even if they are not signing an employee contract as a whole, can be useful for your company.

Confidentiality Agreements

Many businesses have valuable production techniques, client information, or internal processes that should not be shared with others for fear that a competitive edge will be compromised. The employees that have access to this information should be required to sign a confidentiality agreement so that your key business information is not shared with others. You may assume that your lower level employees would not have connections that will care about this type of information, but that is not always the case. It is certainly better to have the agreement in place and never need it instead of the alternative!

Non-Compete Agreements

A non-compete agreement prohibits your employees from working for your competitors for a period of time after they leave your employment. This type of agreement prevents problems associated with sharing privileged or otherwise unique business information with your competition. It can also help you retain some of your top employees in many circumstances as well. However, most forms of non-compete agreements are not valid in California.

Employee Handbooks

Although many businesses would not consider an employee handbook a contract per se, it can be regarded as a binding agreement if drafted properly. Having employees sign an acknowledgment that they read and understood the terms in the handbook could be valuable in if a dispute arises regarding discipline or company policies. It can also be helpful to show that the employee understood that he or she was an “at will” employee instead of subject to an employment contract as well.

Employment Offer Letter

Having an employee sign their offer letter is a good way to show that the employee has accepted the terms of the offer of employment. It can also be a good way to prove that the employee read and understood their job description, including their rights and responsibilities in their role. Just be careful with these letters as they may be construed as an employment contract if not drafted properly.

Getting Employee Contracts Just Right

Keep in mind that independent contractors or those who are offering consulting services may have different types of agreements or contracts that they should sign. They can, however, often be a similar version of the documents that your employees use.

Because of the potential for any of the contracts to be construed as a contract for employment, it is a good idea to have an experienced business or employment attorney draft these agreements. Find out more by calling (925) 399-1529.

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Written by Integrated General Counsel

Our focus includes handling a variety of corporate matters and also includes litigation in state and federal courts. Our current practice includes providing transactional services and representing a variety of small and medium-sized companies as their outsourced general counsel.