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Three Important Terms to Protect Businesses in Employment Contracts

On Behalf of | May 27, 2020 | Business Law |

A business is only as good as the people who work for it, and Boston business owners often go above and beyond to hire the right employees to help their enterprises succeed. Getting the best help in the right jobs can be tricky, and often when it comes to negotiating employment contracts business owners can feel as though they are sacrificing protections for their companies in order to bring on talented workers. Employment contracts can make or break employment relationships, and business owners can get help to make sure their agreements are in order.

An employment contract between an entity and a new hire should contain a number of terms, but business owners should know that they can go above and beyond the basic boilerplate inclusions of salary and grievance procedures when offering a contract to a prospective hire. In fact, businesses can draft and update agreements to specifically manage the possible conflicts and employment issues that individual hires may present based on the positions into which they will be placed.

This post is offered to provide readers with some suggestions of terms that can be included modified, or expanded to specifically protect employers in their contracts with new hires. This post does not offer any legal advice, and when creating a new contract an individual can always work with a business law attorney to help them protect their interests.

Term #1: Ownership of Inventions and New Products

It can be difficult for some individuals to relinquish ownership rights in products and items that they develop while working. For example, if in the course of their job an individual discovered a new bandage adhesive that did not hurt when pulled off of the skin, they may want to sell their discovery to the highest bidder. If an employer did not include and enforce a work-for-hire or ownership of inventions clause in their agreement, that employee may be able to do just that. Ownership clauses protect employers from losing rights to products that were developed in the course of work for their businesses.

Term #2: Confidentiality Clauses to Protect Intellectual Property

Similar to ownership of inventions’ clauses, confidentiality clauses protect a business’s ownership in an idea, design, format, or other item of intellectual property that they had before an employee was hired. In the case of a food manufacturer, a specific product may have a very secret and very popular recipe that distinguishes it from competitors. The inclusion of a confidentiality clause in an employment contract would prevent an employee from learning that secret and sharing it with others for their own benefit.

Term #3: An Expanded Compensation Clause

Practically every employment contract includes a provision that discusses how much money an employee will be paid for their work, how often they will be paid, and on what scale they may expect to receive bonuses, raises, and other financial perks. Not all contracts, though, include provisions regarding possible limits on compensation for taking on other work-related responsibilities. An employee who attains a leadership role within their work organization may expect that such a role would entitle them to more money; a no additional compensation clause may protect an employer from demands for more pay.

Strong employment contracts are one of the most useful ways for businesses to hire capable employees and protect themselves from possible employment-based challenges. Business owners do not have to draft their own employment agreements and can always seek the counsel of business and employment law attorneys for help. Employee and position-specific questions about contracts should be directed to legal professionals as this post offers no specific legal guidance.