Contracts form the basis of most legal relationships, including those between employers and employees. Whether you are growing your business or seeking to retain its success, it is important to get contracts right.
Legal disputes often arise when contracts are lacking or unclear. Disputed contractual terms or rights can result in lengthy litigation, which takes up time and money that could have been invested into your commercial activities instead. Therefore, it is important to consider the fundamentals of an effective employment contract. Outlined below are some key factors that business owners and managers should be aware of.
The classification of workers
It is pivotal that the legal relationship between employers and workers is clearly defined. There are several different classifications of workers, such as independent contractors, part-time workers, full-time workers and temporary workers. Employee classification can have implications on your business tax. Furthermore, workers have different legal rights and benefits depending on how they are categorized. Appropriately categorizing your workers is in the best interests of your business and could prevent lengthy legal disputes.
Many business models rely on protecting trade secrets. If this is the case for you, then you need to consider confidentiality in employment contracts. Sometimes, employers draw up separate agreements, but there is no reason such aspects cannot be included within an employment contract.
Compensation and benefits
As well as furthering their career prospects, employees prioritize the remuneration they are to receive. Not only is it important to establish this during the interview process, but it should also be clearly outlined in the contract. Clear communication over compensation and benefits can ensure that employees are content and negate the risk of lengthy court proceedings.
Establishing sound employment contracts protects your commercial interests. If you find yourself caught up in a legal disagreement, you should be aware of your legal rights as an employer in California.