I know…as a small business owner you have to wear a lot of hats. You are too busy. And anyway, written employment contracts are for big companies. Small businesses like yours don’t need them.
Well, many small businesses need them. In fact, small businesses are more vulnerable because they don’t have (and probably can’t afford) expensive attorneys to protect themselves.
Here are 4 important reasons why…
1. Written employment contracts ensure the confidentiality of your confidential information and trade secrets Confidential or confidential information and trade secrets about your business give you a clear advantage in your market. This information must be carefully guarded to prevent it from falling into the hands of your competitors. But you often need to reveal this same critical information to your employees so they can do their jobs. By including a confidentiality clause in your written employment contract (or having the employee sign a separate confidentiality agreement), you can prevent your employees from disclosing that information or using it for personal gain.
2. Written employment contracts protect your participation in the work that employees do for your company Believe it or not, your employee could create software programs, musical arrangements, sound recordings, and so on. as part of your job and then claim your property. And your employee could be right.
Under federal law, works (such as software programs, newspaper articles, musical arrangements, sound recordings, etc.) that a person creates as an employee immediately become the property of the employer. That same law provides that certain works created by a non-employee (independent contractor) belong to the person who created them unless the parties expressly agree in a written document signed by them that the work will be considered a work made for hire.
The problem is that this law is still unresolved, and even though you may think you have a strong working relationship with your employee, at some point later he or she could challenge it on a technicality to gain ownership of a work that he or she owns. created.
There is a simple way to protect against this. Simply include a “Work for Contract” clause in your employment contract. This “Work for Hire” clause satisfies the requirement that the parties expressly agree in a written document signed by them that the work shall be deemed to be work for hire.
3. Written employment contracts prevent former employees from stealing from your employees You can prevent your employee from (a) trying to influence any of your current or future employees to leave their employment with you or (b) trying to influence anyone or company stop doing business with you.
4. Written employment contracts prevent employees from competing against you You can prevent your employee from competing (or working for any company that competes) with you during their employment with you and for a set period of time after that employment ends . This means that when the employee’s employment ends, he or she cannot accept a job with a company that is in direct competition with you.
(Note: For this restriction to be effective, such limitation, whether in geographic area covered or length of time, must not be broader than necessary to protect your business. In addition, while a covenant not to compete ordinarily may be imposed on a new employee as a condition of employment, if it is imposed on an existing employee, it must be supported by some independent consideration beyond a simple promise of continued employment, such as a raise, bonus pay, or better commission terms. )
