On July 9, 2014
Our clients are often keenly aware of the benefits of entering into written contracts with customers, vendors and suppliers, but frequently fail to consider the benefits of written employment agreements. Many mistakenly assume that an employment agreement is only utilized when an employee is being hired for a set term, and that such agreements should not be utilized for “at will” employees.
There are important protections available to the employer by documenting the employment relationships in a written agreement. Generally an employment agreement can clarify in writing the key terms of the employment relationship so they are clearly understood by the employee. The agreement can also clarify specific duties regarding employee non-disclosure of trade secrets and the ownership of any inventions or other works of authorship created by the employee during the term of his or her employment. Finally, important dispute resolution policies, such as an employer’s desire to compel arbitration for any claims arising out of the employment relationship, must be set forth in writing, and an employment agreement can address this need. When used together with and Employee Policy Manual, an employment agreement can provide important protections to the employer.
Companies are more likely to utilize a written agreement when entering into relationships with independent contractors, but often rely on a generic form or a form used by another company, without considering the important terms that may or may not be included in the form they are signing. Contractors retain important rights if they are not properly assigned to the company. This can in some cases defeat the entire reason the contractor was retained if these rights are not properly addressed in the independent contractor agreement. We understand that there are many independent contractor agreements available to our clients, and they may have selected one which they prefer. We therefore encourage our clients to locate forms they are comfortable with using, but always recommend that they speak to an attorney about the specific services that a contractor will be performing to determine if any additions, deletions or modifications to the form are necessary. Even for those companies for which we developed the independent contractor agreement, we typically modify the agreement from contractor to contractor to address the unique way in which the work performed by contractors differs from one situation to the other.