Employment Agreements
In California, where employment is mostly at-will, having a written employment contract or agreement is often considered more of an exception rather than a rule. Employment contracts are documents signed between the employer and the employees specifying the terms and conditions of the relationship.
Having an employment contract has its advantages and disadvantages. To an employer, a written contract gives him power over his employees including control over their ability to leave business, the grounds for termination, available benefits, the methods for resolving disputes, and limitations on competition and disclosure of trade secrets and other business information.
On the other hand, a written employment contract may pose a problem to an employer, especially if he decides to change the terms of contract or wants a business change, which he can only do by renegotiating the terms. With an employment contract, an employer is also under obligation to deal fairly with the employees under the covenant of good faith and fair dealing, otherwise he can be held liable for violation of contract and breach of the duty to act in good faith.
Basically, an employment agreement should contain the following elements:
- Employment tasks - The job position that an employee is expected to perform, explaining entirely his or her duties. It should also remind the employee that the task might be expanded or modified according to the need of the business.
- Wages - The amount of base salary that an employee would receive upon employment and the requirements for bonuses and commissions should be properly set forth.
- Benefits – The list of benefits that employees may receive, including a provision that the employer has the right and discretion to exclusively alter their wages and benefits, must be mentioned in the agreement.
- Stock options - In companies that allow their employees to have stock option grants, the employers should clarify that the grant is a stock option rather than shares of stocks.
- Duration of Employment - This specifies the length of services an employee has rendered for the company.
Issues and problems may arise out of a poorly-drafted employment contract that could adversely affect the employer-employee relationship. This underscores the importance of having an employment contract that is both well-prepared and well-written.
Business Corporate Attorneys can help you prepare this vital document, taking into consideration the necessary elements of a good employment contact.