Many employers often wonder if they should require all employees to sign an employee agreement at the time of hire. Unfortunately, there is no easy answer. There are both advantages and disadvantages to signing on the dotted line.
Below are five of the most important legal considerations for New Jersey and New York employers:
- Employee agreements bring clarity.
A contract that specifies the terms of employment can help avoid disputes because both parties understand what is expected. Employee agreements can address a variety of issues, including benefits and compensation, job responsibilities, length of employment, nondisclosure, and covenants not to complete.
- Worker agreements offer protection.
Contracts can be drafted to offer a number of legal protections. For instance, you can limit the employee’s ability to compete with your business upon leaving the company, impose confidentiality obligations to protect valuable trade secrets and other proprietary information, ensure ownership of the employee’s work product (i.e. inventions, artwork and other intellectual property) and dictate how disputes will be resolved (mediation, arbitration, etc.).
- Employee contracts limit flexibility.
An employment agreement generally limits an employer’s ability to fire an employee at will by specifying the term of employment as well as the grounds for termination. Therefore, if the employer seeks to fire the employee before the contract has expired, it might incur costs related to negotiating an early termination.
- Worker agreements impose obligations on both sides.
While an employment agreement can impose valuable obligation on employees, employers have obligations too. For instance, all contracts impose a “covenant of good faith and fair dealing.” A breach of the duty to deal with employees fairly can serve as grounds for a lawsuit.
- Employee agreements should be tailored to the circumstances.
In the end, whether or not you require an employee to sign a written contract often depends on the role of the employee within the company. Therefore, it can make sense to require some but not all employees to sign employment agreements. In any case, it is advisable to consult an experienced employment attorney to determine if the advantages outweigh any potential downsides.
Ramon Rivera, attorney at Scarinci and Hollenbeck, focuses his practice on the representation of public employers and private corporations in traditional labor and employment matters. He is primarily responsible for the representation of numerous public entities and municipalities with regard to various labor and employment issues. Additionally, he specifically focuses on labor negotiations, interest arbitrations, grievance arbitrations and disciplinary hearings for public employers. For more information, please contact (201) 806-3388 or e-mail firstname.lastname@example.org.