• July 19

• Posted By: Adrienne Fischer
• Posted In: Business Law
• Date: July 19, 2024
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Navigating Employment Contracts: Key Clauses Every Employer Should Know

Hiring a new employee can be just as exciting for a business owner or manager as it is for the newly hired employee. The business is getting someone to fill a gap or bring new skills and experience to their team, and the employee is getting an opportunity to earn a living and advance their career. It sounds like a win-win, right?   It can be, but only if they have an employment contract that both parties understand and agree to. Consider, for example, employee responsibilities. These are their day-to-day tasks that largely define their role. If the contract is unclear on what these tasks are (or how the employee will be held accountable for them), then the employee may not meet expectations and the job they were hired for may never be finished.   This is why it’s so important to understand the ins and outs of an employment contract, including the key clauses that are crucial to get right.

Essential Clauses in Employment Contracts

An employment contract exists to protect both parties: the employer and the employee. While job details can vary based on things like employee role, business or industry, location, and more, many contracts use the same structure.    Every employment contract should include the following essential clauses:   Job Responsibilities: Clearly defined employee roles and expectations, possibly including performance evaluations. Compensation and Benefits: Detailed salary, bonus structure, and other benefits like healthcare coverage, retirement options, etc. Confidentiality Agreements: Protect company information by explaining the need to protect company information, including intellectual property. Non-compete Clauses: Prevent employees from joining competitors (and possibly sharing proprietary information) after they leave your business. Termination: Explain details like who can terminate the employment relationship, required notice, cause of termination, etc.   This isn’t an exhaustive list, of course. Other clauses often included in an employment contract are a vacation and sick leave policy, hours of work, overtime hours and pay, and temporary layoff. An experienced employment lawyer can help you determine what should be included based on specific details like the nature of your business, location, industry, etc.

Legal Compliance

There are laws and regulations in place to make sure employers aren’t taking advantage of employees or discriminating against employees based on race, religion, sex, age, etc. While there are federal employment laws, an employer should also be aware of state and local laws that might impact their employment contracts and employee relationships. For example, consider the new non-compete law in Colorado. As of August 2022, Colorado implemented stricter regulations on non-compete clauses, limiting their enforceability. This law prohibits employers from imposing non-compete agreements on employees who earn less than a certain threshold, which is adjusted annually for inflation. The trick with maintaining compliance with employment laws is that they can be updated or modified from time to time. Take the non-compete example above — employers must stay updated on the latest threshold and other legal requirements to ensure their contracts are enforceable. An experienced employment law lawyer will help you stay on top of legal changes that must be acknowledged in employment contracts.

Dispute Resolution

Even with a thorough employment contract in place, disputes can sometimes float to the surface. Some of the most common issues are employee discrimination, harassment, wage disputes, and wrongful termination.   With any of these issues, accurate documentation is crucial for dispute resolution, and that includes the employment agreement. All involved parties should document the issue and provide supporting documentation to help with issue resolution.   Many times, legal counsel will also be involved (along with human resources and management) to help the employer and employee understand the situation, next steps, and legal ramifications. At Basecamp Legal, our team of experienced lawyers can help provide guidance and ensure understanding of employment contracts and local, state, and federal laws. It’s important to note that when dealing with disputes, you should always rely on a legal professional to help protect you, your business, and your employees.

Trust Legal Experts

No matter what kind of business you run or what industry you may operate in, having clear employment contracts can offer clarity and prevent disputes from arising. Hiring an employee without an employment contract in place — or relying on an outdated contract template — can put your business in jeopardy and possibly lead to legal action. Don’t risk it.   Get in touch with our team of experts at Basecamp Legal. We have decades of experience with local, state, and federal laws in Colorado and beyond, and we know what to look for when it comes to drafting and reviewing employment contracts.  Contact us today to learn more about our employment law services.

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