Fundamentals For Small Business Employers: Employee Agreements
Many people associate their first day on a new job with a slow start—an introduction to their coworkers, a tour of the office, and a stack of new hire paperwork they must read and sign. The new hire paperwork covers topics that range in interest to most new employees. For example, benefits information may pique the interest of the average employee. However, many employees gloss over confidentiality agreements, job descriptions, and drug testing forms.
Regardless of how they are handled by employees, employers should carefully consider and review new hire paperwork, as well as their other employee agreements, policies, and procedures, to help ensure they are in the best position possible if things go awry with an employee. This is where the adage, “An ounce of prevention is worth a pound of cure,” holds true.
What types of documents are typically included?
Your company’s employee agreements[1] will likely grow with your business and workforce, often apply to employees from before they are hired until after their employment with your company has ended, and may include documents such as:
Employment Application. This helps protect your company by understanding the education and employment history of your applicants. For example, does the applicant have experience in your business and have they ever been fired?
Offer Letters. Informing newly hired employees of matters relevant to their new job, such as their job title, pay date, and rate of pay.
Job Descriptions. Identifying the essential job functions of a position, which is a critical issue with regard to potential ADA accommodation requests and claims.
Intellectual Property (Work-for-Hire) Agreement. This identifies the owners of intellectual property created by an employee while working on behalf of their employer.
Jury Waiver or Arbitration Agreement. These agreements typically lead to faster and cheaper resolution of employee disputes.
Regardless of which documents are included, businesses must ensure that they comply with all applicable laws, which vary by state and locality. For example, certain laws limit questions on employment applications related to prior pay and criminal history, while others prohibit employee jury waivers and arbitration agreements. Likewise, employers should ensure that their documents are tailored to their operations. As with all contracts, the details of these documents are critical.
Can an employer require existing employees to sign new or updated documents?
Businesses often implement new or updated employee agreements and wonder whether they can require existing employees to sign these new or updated documents as well. As with many legal queries, the answer to this question is a resounding “maybe.” For example, in order to be enforceable, employers must offer current additional consideration (for example, a bonus or updated access to confidential information) to current employees in exchange for signing a new noncompete agreement. However, additional consideration is not required in exchange for the execution of a jury waiver.
What steps should an employer take in assessing their current employee agreements?
Employers should work with their human resources and legal teams to ensure a comprehensive review of their employment agreements. Consider reviewing an employee agreements/policies checklist, such as this one, while auditing your current documents. In developing a plan to implement any updated or new agreements and policies, be sure your employee documents are tailored to your business and all applicable legal requirements.
[1] This article does not address mandatory government-issued employee documents, such as the I-9 or W-4. Be sure to work with your HR or legal professional for additional information.
This update is for informational purposes only and does not provide legal advice. Every legal situation is different and must be independently analyzed by an attorney. Please consult with an attorney for specific guidance.
About Luna Law, PLLC
Luna Law, PLLC, provides a wide array of legal services to small businesses, from the creation of corporate entities and contract negotiation to employment counseling, risk mitigation, and compliance with local, state, and federal regulations. Contact the firm for a consultation or visit RachelLunaLaw.com for more information.