Tuesday, October 29, 2013

Choosing an Employment Agreement that’s best for your Business

In the employer-employee relationship, creating a thorough employment agreement is important not only for the employer, but also the employee.

This is part one of a two-part series in which I will review some provisions that should be considered for both businesses and employees when entering into an employment agreement. In this article, we will examine the employer’s point-of-view and items that should be included to protect their best interests.

Employee handbook: The handbook should cover the policies, terms and conditions that an employee is expected to adhere to while working at the business. Important topics like work hours, attendance policies, sick time, and vacations should be covered. The handbook is also a good place for employers to plainly state to employees that both parties have entered into an at-will arrangement, meaning that the employee can be terminated for any reason or no reason whatsoever, at any time.  Likewise, the employee can terminate the employment arrangement at any time for any reason, or no reason whatsoever.

Policy on equal opportunity & harassment: This is where the employer conveys that there will not be any discrimination based on race, color, religion, gender, sexual orientation or national origin. This is a sound business practice, and ensures compliance by the employer with the laws of the state of Washington. Presenting this policy helps protect employers against lawsuits while demonstrating to employees that the business is fair and will not tolerate discrimination.

Progressive discipline policy: An employment agreement should include a progressive discipline policy. That is, if there is misconduct or a complaint about an employee, proper procedures should be followed to ensure the employee is given an opportunity to correct the behavior.

In this regard, the employer is protected from harmful acts by the employee. Issuing a warning is an opportunity to correct the behavior or conduct, but if the behavior or conduct is not corrected, then the employee could be terminated. There should be a firm understanding on both sides what the conduct is, as well as what the practices are for warning an employee of misbehavior, misconduct, and problems with their employment.

Email/Internet/social media policy:  With the expansion of social media, policies with regards to email, Facebook, Twitter, and other social media postings should be addressed. No information gleaned about the employer or clients through the course of employment should be shared on social networking sites at any time. With regards to email, it should be clearly stated that the employee should not expect a guarantee of privacy using a workplace email account. In other words, employers can look at individual work email accounts at any time.

Full-time employees vs. contractors:
More often than not, employers want to retain people as contractors rather than employees. They do this to save on employment taxes, but solely relying on this arrangement can become problematic, especially if the work is closely overseen. As a business, it’s very important that you inform any independent contractors that they are free to work their own hours and at a location of their choosing.

Documentation of job performance: Employers need to keep documentation of each employee’s job performance for discussion during periodic performance reviews. Employers should clearly lay out the specifics of such reviews. For example, at what interval will they be performed; who should be present (certain members of management); will evaluations be given in writing or orally, etc. A detailed written job description is also needed not only for performance reviews, but also so that both parties have a clear understanding of what the duties and expectations of a position are.

Severance pay: Employers need to find ways to retain valued employees and their beneficial skills and expertise. A severance package can be a good incentive for an employee to stay with the company. However, it should be conveyed that if an employee leaves voluntarily, he or she will not be awarded a severance package.

Confidentiality agreement: Both sides should automatically agree that confidentiality is essential to their best interests. In my opinion, the employer and employee should always agree in writing to keep information between them confidential, and out of the hands of a third party.

In part 2, I’ll review items that pertain to employees and what they should be mindful of when reaching an employment agreement.

If you have questions about employment agreements, please feel free to contact my office. We can discuss the employment agreement that you are considering and how it could affect you and your business.

Disclaimer: Nothing in this posting should be construed as legal advice or the commencement of an attorney -relationship.  The opinions are solely those of the author acting in his capacity as an author, not an attorney.