The Startup Law Guide
In an ideal world, employment relationships would be non-contentious. In reality, what began as an amicable arrangement all too often devolves into disagreements and disputes.
The best way to protect yourself from potential future conflicts is to enter into an employment agreement at the time of hiring. Whether you’re hiring contractors, part-time workers, or full-time employees, employment agreements serve to define the expectations and obligations of both parties in the employment relationship. From growing companies to established corporations, every work environment is different, and your employment agreements should reflect the needs of your unique business.
While an employment agreement is not a one-size-fits-all document, every agreement should be directed at defining the relationship and protecting against future liability.
Surprises in your employee relationships can throw your business off course. Employment agreements are designed to prevent unforeseen bumps in the road, and establish employment conditions that are stable and predictable.
Most agreements will include some, if not all, of the following terms.
Length of Employment. Some employees are hired for a set term, be it 6 months or 5 years. In other cases, employment is “at will,” meaning that employment is indefinite. The employment agreement should clearly define the nature of the employment arrangement.
- Termination. The agreement should specify when and how the employee can be terminated. With at will employees, termination can be at any time and for any reason. For other employees, the agreement will likely include a notice period for termination, as well as the permissible termination grounds (typically, “good cause”).
- Compensation. The agreement should clearly state the amount of the employee’s compensation, along with the payment procedure.
- Noncompete and Nondisclosure. Some agreements include provisions preventing employees from doing similar work for a set time after termination. They also often prohibit employees from disclosing sensitive or confidential company information.
- Dispute resolution. The employment agreement is your chance to proactively decide how future disputes will be handled in the event that they arise, be it in court or through alternative dispute resolution, such as arbitration or mediation.
Managing Risk and Liability
Dealing with employment complaints is one of the least pleasant aspects of running a business. While it may not be possible to avoid all potential conflicts, a well-crafted employment agreement can eliminate many of the risks associated with the breakdown of employment relationships.
By defining the expectations and grounds for termination at the outset of the relationship, you remove the guesswork that can accompany terminations when no such agreement is in place. Complying with the agreement’s termination procedures will help shield you from liability for wrongful termination claims. The same goes for claims related to the scope of the employment – putting expectations in writing before your employee starts will minimize later confusion.
When it comes to running your company, any tools that can minimize the likelihood of future litigation are good business practice, and employment agreements are no exception.
Legal Guidance in Building Your Business
At The Gouchev Law Firm in New York, we work with businesses of all sizes, including start-ups and franchise businesses, across New York City and New Jersey, in meeting all types of transactional needs. Call us at (212) 537-9209 or schedule a free strategy session today to see what The Gouchev Law Firm can do for your business.
In an ideal world, employment relationships would be non-contentious. In reality, what began as an amicable arrangement all too often devolves into disagreements and disputes. The best way to protect yourself from potential future conflicts is to enter into an...read more
If you are a potential franchisee considering investing in a franchise, one key step in your due diligence is will be to receive and review the Franchise Disclosure Document, or FDD. The purpose of the FDD is to give you an informed understanding of the risks,...read more
There are a number of reasons to form an LLC, S-Corp, or other corporate form, but one of the biggest reasons is right there in the first two initials of an LLC: Limited Liability. By creating an LLC or similar corporate formation for your business, you can prevent...read more
A business partnership is like a marriage in a lot of ways. You and your business partners joined together because you had a common purpose that you both found worth pursuing for your mutual benefit. And, like a marriage, your partnership means you have rights but...read more
For many startup owners and entrepreneurs, following their passion by building their own business was at least in part a way to avoid cubicle life, spreadsheets, and generally uninteresting issues of corporate finance and compliance. But as your business grows, these...read more
From yoga studios to restaurants to gyms to professional service companies and everything in between, owning and operating your own franchise can be a great way to become your own boss and rake in serious cash while building on brand name recognition and other...read more
As an owner of an emerging LLC, your sights may be set on winning contracts with big clients, negotiating contracts with servicers and vendors, and even on the ultimate goal of an acquisition agreement from a larger company to purchase your company. But, for the time...read more
Build Your Vision Today
Some clients are born great, some achieve greatness, and some have greatness thrust upon them. Whichever you are, we’re here to help you continue the greatness.FREE STRATEGY SESSION