Employment Agreements; Drafting, Negotiating And Understanding The Fine Print

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Negotiating, drafting and executing Employment Agreements goes far beyond simply determining the best methods to hire, retain and terminating employees. Careful planning can prevent future legal issues, especially if your attorney is consulting you with regards to the most common mistakes that are made during the hiring or firing process. In fact, savvy businessmen often consider the utilization of an attorney to assist with the drafting of employment contracts to be an investment that prevents unnecessary and expensive litigation down the road.

Non-Traditional Agreements

Employment relationships are generally created through a “meeting of the minds”. The common misconception in this area of contract law is that a formal, written contract must be entered into for a valid contract to be in place. This could not be further from the truth, and is often something I find many employers have difficulty accepting. Employment contracts can be created through traditional written contracts, but also through oral, express, or even implied contracts that are agreed upon with respect to the core terms of the parties’ mutual assent. These relationships can involve employers, employees, independent contractors, “at-will” employees, temporary assistance, and also “on-call” employees. The written contract is often considered the mere memorialization of the parties’ mutual assent to be bound by the contract.

Common Contractual Obligations 

Signing a Representation – This is common if you have been employed previously by a similar employer in the same industry. Ultimately, your current employer wants to ensure that you are not the subject of a non-compete clause that could invalidate your Employment Agreement and potentially leave them on the hook for damages-in the event that they were privy to such information. The “Non-Compete” prohibits an employee from entering into a similar profession that competes with the former employer. For instance, a stock broker at Morgan Stanley leaves his trade-desk and is hired by Merrill Lynch the next day. This could be problematic if he is bringing Morgan Stanley’s clients, trade secrets, and proprietary data – especially if this employee was the subject of a Non-Compete. These clauses are also typically referred to as “Restrictive Covenants”. The policy reasoning behind these types of clauses is to protect a business’ good will and trade secrets. Non-Competes typically last for a pre-specified period of years and are within a certain mile radius. Beware of agreeing to indefinite Non-Compete agreements in the first place.

Understanding the Difference between a Non-Compete and a Non-Disclosure – Unlike the highly restrictive Non-Compete Agreement, a Non-Disclosure Agreement (or “NDA”) is designed to protect the dissemination of confidential information. These Agreements are typically drafted for regulatory compliance with privacy laws, and also to ensure that a clients’ personal data is safeguarded by any individual or entity that has a business need to access that information.

Negotiating the Termination Clause - It is critical to know and understand what events could potentially trigger the employer’s ability to terminate the employment of an employee. For instance, in a contract that allows for the employer to terminate the employee for “lack of performance” it is important to understand how “performance” is objectively defined. It is important to consult an attorney prior to entering into a contract with ambiguous language.

Contact Jonathan Shalom, Esq. to Discuss Your Situation

In the event that you are an employer seeking to hire help for your business or an employee about to enter and execute an Employment Agreement, it is highly recommended that you have a competent attorney guide you in the process. SHALOM LAW, PLLC may assist you in the process. SHALOM LAW, PLLC has the knowledge and experience to negotiate a favorable Agreement on your behalf to ensure that your rights and privileges are protected. In cases where the employer offers a “take-it-or-leave-it” agreement, it simply pays to have a knowledgeable attorney discuss the contract with you so you have all the information you need to make a sound decision. 

SHALOM LAW, PLLC has experience with representing clients in a various employment-related matters, including litigation, arbitration, compliance, general counseling, and victims’ rights. In addition to the issues presented above, you should also contact Mr. Shalom about any questions regarding FLSA, Department of Labor audits, discrimination, wrongful termination, hostile work environments, or any other type of civil legal dispute. The first step to justice is a free legal consultation to understand your rights and responsibilities.  SHALOM LAW, PLLC may be contacted at 718-971-9474.

By Jonathan Shalom, Esq.

Jonathan Shalom, Esq., a duly admitted attorney representing and counseling clients with all Employment and Healthcare law matters in New York State. Mr. Shalom may be contacted at 718-971-9474 for a free consultation.