Employment Agreements – Why They Are Important

For over 30 years, the attorneys at HALE BALL MURPHY, PLC have been involved in the drafting, review, enforcement and defense of employment agreements for Employers.  During that time, the lawyers at HCB have learned the importance of addressing the critical issues of employment agreements for all employees.

Establishing the Employment at Will Status. The most important aspect of all employment agreements is to establish that the employee is an "employee at will".  This means that the employee can be hired and fired at any time for cause or for no cause at all.  If an employee is not and employee at will, you must have cause to terminate the employee or risk a law suit that will be more difficult to defend.

Benefits. An employment agreement should spell out in general terms the right, if any, of an employee to the fringe benefits of the firm such as vacation time, sick leave time, personal leave time, etc.  The agreement should make the company's position clear as to any carryover of unused leave, as well as whether such time is compensable when the employee leaves.

Restrictive covenants. If an employee holds a position where you have a concern over his or her ability to take your customers or employees if the employee leaves and either starts his/her own business or goes to work for a competitor, you should consider a properly drafted non solicitation agreement.  Properly drafted non solicitation agreements can protect your most valuable assets, your employees and customers.

Intellectual Property. Your agreement should make it clear that all inventions by your employees while working for you are owned by the Company.

Termination. Your agreement should provide for how the employment status can be terminated.  The simpler the better.

Policy Manual. Your agreement should make it clear that the employee is bound to comply with all the terms and conditions of your policy manual.

Exempt or Non-exempt status. Your agreement should make it clear whether the employee is considered an exempt or a non-exempt employee for overtime purposes.  However, merely designating an employee exempt does not mean he or she will actually be deemed exempt if the employee does not meet the various government tests.  This area of the law is very tricky and needs to be addressed carefully.

Change in responsibilities. If you employee changes responsibilities (is promoted or moved to a different position) you should review his/her employment agreement to make sure it does not conflict with the employee's new position.

HCB is ready to work with you to prepare, review and enforce your employment agreements.  Please feel free to call Robert Baumgartner or Scott Pohlman, 703-591-4900 to discuss this further.