A business contract is arguably the most important document a business owner needs in order to successfully run his business. Making sure the contract is enforceable and has the key elements that pertain to the needs of the business will ensure that it is protected if there is a contract dispute. For example, employment contracts should clarify the terms of employment in advance so that they are enforceable in the event that there is an employment dispute.
California is an employment-at-will state, which means that without an express agreement, either party can change the terms or conditions of employment for any reason, or terminate the relationship with or without advance notice, with exceptions.
This at-will presumption is a default rule that can be modified by contract. For a business owner who wishes to create a standard of excellence as well as a sense of stability for the company, having a clear framework of employee rights and obligations, the work to be performed as well as the terms of employment will attract top talent and keep the business competitive.
Avoiding legal jeopardy
There are some important aspects to a well-written employment contract that prevent ambiguity and future litigation problems. First of all, it is essential to make sure that the contract does not infringe on employees’ rights as protected under federal or state law.
If there is a noncompete agreement, be sure to check applicable state laws for restrictions. California does not recognize noncompete agreements, however, if the agreement was made in another state and includes a “choice-of-law” provision, it may be enforceable.
The signatures are the most important part of any agreement, and all paperwork should be handled before employment begins. Any employment contract should have an offer of salary and benefits, the consideration, which is the payment in exchange for work, and the acceptance in the form of the employee’s signature.
A common mistake that employers can make is misclassifying employees as independent contractors. Because the employer controls the work hours, location and duties of an employee, if an independent contractor is given those same employment parameters, they will be considered legally to be an employee and allowed the same legal rights and protections.
Doing annual reviews of employment contracts to verify that they are current with changing regulations is crucial in order to avoid violations of the relevant laws.
Businesses in Huntington Beach can benefit from sound legal advice when drawing up essential documents that protect the business and are legally binding.