Finding the right talent is often critical for the growth and future success of a business. Every new hire has the potential to improve company operations or expand its profit margins. Unfortunately, every new hire can also significantly increase the company’s liability.
They may turn out to be unethical or incapable of performing key job functions. They might mistreat their coworkers or accuse successful coworkers of mistreating them. They could disrupt the company’s culture or perform substandard work on a project for a critical client.
Businesses usually try to carefully vet employees before hiring them. They also need to include the right terms in contracts to limit their legal vulnerability after hiring a worker. What contract inclusions can help organizations minimize employment-related exposure?
Restrictive covenants
Particularly when employees may have access to trade secrets, preventing them from misusing their position, relationships or knowledge in the future is important. There are several kinds of restrictive covenants that can protect employers. Employers may want to add non-compete agreements to their contracts. Non-solicitation and non-disclosure agreements can also be useful contract inclusions. By preventing employees from unfairly competing, sharing non-public information or leveraging their business relationships for personal gain in the future, employers can take some of the risk out of hiring new talent.
Performance and pay standards
Employers generally need to include clear terms regarding what they intend to provide to their employees in their contracts. Details regarding base pay and benefits, as well as any bonuses or commissions, can be critical for the prevention of wage claims and other disputes in the future. Similarly, performance standards for the employee can also be important to integrate into a contract. The company may even want to outline its disciplinary standards and how it goes about seeking improved performance from workers not meeting current standards.
Conflict resolution clauses
Employers once heavily favored mandatory binding arbitration clauses. However, many of the best and brightest professionals now view such clauses negatively. They believe that arbitration may put them at a disadvantage, and the inability to reject the outcome of arbitration can leave them concerned about their options if the employer breaches the contract or mistreats them. Clauses that require attempts at arbitration or even mediation before an employee files a lawsuit over a disagreement may be less likely to trigger negative reactions in prospective employees. They help protect the company from bad publicity in the event of an employment dispute and can limit the expenses involved in settling disagreements with workers.
Updating employment contracts to ensure that they include appropriate protections for the organization can be a smart move. Business owners and executives may need help evaluating their current contracts and employment needs to integrate the optimal terms in their updated contracts, and that’s okay.