/ Why You Need Employment Agreements /

Why You Need Employment Agreements




No matter the size of your business, startups, creative service companies, and corporate human resource executives alike face a number of challenges when it comes to hiring new talent. Companies invest a great deal of time and money into recruiting viable candidates.  Even bands can spend a great deal of time and effort auditioning musicians and selecting other personnel to aid them in their creative and business endeavors. It is therefore crucial that employers lay out the full terms and details of the employment at the outset of the new relationship by entering into an employment agreement.

Once the interviewing process comes to a close, and the employer decides that he or she has found the right person, it is far too common for an employer to believe that the hiring process is over. However, the real end of the hiring process only comes after an employment agreement is entered into between the employer and new hire. An employment agreement drafted by an experienced attorney allows an employer to fully protect their interests with respect to the specific employment relationship.

Such an agreement can provide a number of benefits to businesses of all sizes. To begin with, an employment agreement allows the employer to properly spell out the scope of the new hire’s work parameters, and to clarify the salary and benefits that the employee can expect to receive during the course of their employment. In addition, an employment agreement may allow the employer to retain the new employee’s services for a given period of time, restricting the employee’s ability to quit and move on to another position. If you are going to invest the time and resources  to recruit, interview, hire, and then train a new employee, it is prudent to have the employee contractually commit to staying with the company for a minimum period of time. With such a provision, if the employee does leave before the term, they would be in breach of contract, and you as the employer would have a legal recourse accordingly.

Furthermore, in the unfortunate scenario where an employee possesses a grievance against the employer, an arbitration clause can protect the employer from the exorbitant costs of lengthy litigation. Additionally, an arbitration clause can eliminate the possibility that an emotional jury might award the employee a financial award that is unreasonably or excessively high.

Following termination of the employment term, an employer may further protect their interests by including a non-compete covenant or a non-disclosure agreement within the original employment agreement. These types of clauses may respectively prevent a former employee from immediately joining certain competitors or from disclosing certain confidential information to third parties.

While New York, California, and a number of other states default to “at-will” employment in the absence of a signed agreement to the contrary, wherein either party may terminate the employment relationship at any time, every reasonable business owner should nonetheless consider the possibility and many advantages of an employment agreement. When drafted by an experienced lawyer, employment agreements provide clarity, functionality, and important safeguards in the context of employment relationships and can prove to be vital documents for all varieties of companies.