New Employee Agreements
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New Employee Agreements

How a new employee is brought into the business varies a lot. At my first job out of law school, there was a week of training, a mentorship program, mock trials – the whole shebang. But many employees are not so fortunate. They get hired and thrown into the mix in one full swoop. They don’t know where to start or what is expected of them.

Let me suggest that the right way to bring in a new employee is slowly and purposefully. You should offer at least some training, a go-to person for questions, and a plan of action.

It is also smart to have the new hire sign some agreements that protect your business, for instance:

A non-disclosure agreement (NDA): If the employee will be learning confidential information in the course of their employment, then having them sign an NDA on Day One is a good idea. This will (or at least should) prevent employees from disclosing your confidential information or trade secrets without your approval.

A work-for-hire agreement: The general rule is that any invention or work product created while at work is the property of the employer, but just to be safe, you may want to consider having new hires sign an agreement that specifically sets this out.

Employment contract: Employment contracts are an excellent way to get everyone on the same page, and also serve as a good defense in any litigation since there is little room for ambiguity once it is signed. Items that you may want to cover include:

  • Job Description: Set forth the job title, duties, expected hours, sales quotas, everything.
  • Compensation: How much will they be paid, is there a bonus structure, how are raises handled? 
  • Benefits: Explain the benefits package in detail.
  • Stock Options. If applicable, how stock options are handled and exercised should be explained.
  • Arbitration clause: Should be mandatory.
  • Immigration Status: Employees need to be able to verify that their citizenship or work visa status.  

Also, since most employees are considered at-will (meaning they can be fired at any time at the will of their employer), it is a good idea to have a clause in your contract that says something to the effect that “nothing in this agreement is intended to guarantee employment or alter the fact that [name of the employee] is an at-will employee.”

Contracts usually cover the worst-case scenario, and fortunately, the worst case scenario rarely comes about. But if it does with one of your employees, you will be happy you had the above agreements in place.

© 2010 Steven D. Strauss, www.MrAllBiz.com