A new team member in your business is always exciting. A previously vacant role being filled means your crew will operate more effectively. A new hire also means there is new potential ready to learn how to operate within your venture. Before their first day, though, you may want to consider an employment contract.
A written employment contract is a signed agreement between the employee and your business. While a written contract of employment is not required, they are commonly used by business owners who want to be thorough or who have invested a lot in new hires. These are a few situations when taking the time to draft an employment contract may be beneficial.
Situations that may call for a contract
A college student working part-time as a barista most likely didn't sign an employment contract. This is because every in state - except Montana - at-will employment is presumed when a person starts working. These are usually less complex job roles that don't require extra caution.
If your new hire is entering a role where any of the following are a factor, it may be advisable to also employ a contract:
- Confidentiality - Stating an expectation of keeping trade secrets and other sensitive information confidential can be critical to some businesses. Following this up with a non-disclosure agreement is always a good idea.
- IP Production - If you work in music, art or other industry that creates intellectual property, clearly defining ownership is a good addition to any employment contract.
- New Hire Investment - Weeks of training, continued education and other investments make many professional level hires more valuable than a typical employee. Including a required amount of notice before quitting or even required term of employment helps preserve this investment.
- Several Employee Duties - Clearly defining your new hire's duties can make their day-to-day work easier and more time efficient.
These are only a few instances when an employment contract can prove critical to a business owner. Speaking to an experienced business attorney is the best way to determine if a contract would fit your needs. They will look at your situation and help you draft a sound document.
Having a plan in place before beginning a venture is the best way to stop problems before they start. If you are looking to bring on a new hire, consider drafting an employment contract. It can help safeguard your investment, your business and your products.