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3 Things to Know About Employee Contracts

By Tanya Roth, Esq. on March 20, 2013 6:39 AM

Employment contracts may seem boilerplate, leading you to think that all employment contracts look the same. But if you're offering an employment contract to a new employee, you'll want to do more than just pull up a free template off the Internet.

Not all employment contracts are equal. While using standard templates may save on legal costs, it also helps to have an attorney to look over your contracts, especially if you drafted them yourself.

Here are three things business owners need to know about employment contracts:

  1. Misclassification can cost you. Make sure you've classified your worker properly. Do you know the difference between an employee and a contractor? This is a good question to run by your lawyer. It's not always easy to figure out and the distinction isn't always clear. But if you misclassify your workers, you could be setting yourself up for labor law violations and possibly tax law violations as well.

  2. Revise your policies. Your employment contracts may reference your employee handbook and printed policies, so make sure they're up to date. Your employee handbook can be as much a part of your employment contract as the contract itself. That's why it's often a good idea to have an attorney look over your employee handbook, as well as your contracts.

  3. Don't be fooled by non-compete clauses. Just because you draft in a non-compete clause into your contract, it doesn't mean that an employee will be bound by it. In some states like California, for example, you can't place undue limitations an employee from taking a job after they leave your company.

As mentioned above, it may seem easy to pull up a contract from the Internet and use it. But employment contracts are full of legalese and may be too broad or too narrow for your purposes.

Also keep in mind that employment lawsuits are quite common. Having an experienced lawyer draft or look over your employment contracts is one way to help prevent those lawsuits from ever taking shape.

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