Demystifying Employment Contracts: A Guide for Employers
Should You Implement Employment Contracts?Contrary to common belief, there is no legal mandate requiring employers to use formal employment contracts. Many employers opt for a simpler approach, utilizing a signed offer letter to outline the fundamental aspects of employment, while maintaining an at-will employment relationship. This approach offers employers greater flexibility and avoids binding the employer to a specific timeframe if the employment arrangement encounters challenges. Below, we'll delve into the reasons why you might consider implementing a formal contract, such as when seeking commitments related to non-compete or non-solicitation agreements, or defining "for cause" termination where it affects an employee's rights to equity vesting.
The Role of Employee HandbooksMost employment handbooks include language explicitly stating they are not contracts. Additionally, they often emphasize that employment remains at will, meaning the employer can modify policies at their discretion.
Employers who use employee handbooks should be sure to include this language. This allows the employer flexibility in changing policies from time to time as needed for the business. While not a contract under most circumstances, employee handbooks are a valuable tool for communicating expectations and procedures, while still retaining the right to amend policies as business needs dictate. Learn more about employee handbooks and policies. Employment Contracts: Non Solicit and Non Compete ClauseNon-compete clauses can place limitations on an employee's capacity to work for a competing entity both during and after their employment. Concurrently, non-solicit clauses restrict the employee's ability to solicit customers and/or fellow employees during and after their employment term. For employers, comprehending the extent and legal ramifications of these clauses is of paramount importance. If these clauses are integrated into your employment contracts, it is prudent to seek legal counsel to ensure a comprehensive understanding and proper implementation.
Learn more about employee non compete agreements. Termination "For Cause" vs. Without Cause: An Employer's ViewIn many employment contracts, the distinction between termination "for cause" and without cause significantly affects employers' rights and responsibilities. Generally, if an employee is terminated without cause, they may be eligible for severance benefits under company policy, which might not apply in the case of a termination for cause. Employers need to understand the specific language in the employment agreement or written policies, as there is no universal definition of "cause" for termination in private employment.
Learn more about termination provisions in employment contracts. For Cause Termination and Non-Compete Agreements in Massachusetts: Legal Implications for EmployersIf you have employees bound by non-compete agreements in Massachusetts, the circumstances of their termination take on added importance. Recent changes in Massachusetts law make non-competes unenforceable if employees are fired without cause. Therefore, as an employer, knowing the cause of an employee's termination is critical if you want to protect your business interests and uphold non-compete agreements.
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Equity Interests and Vesting: Employer Considerations
For employers with employees holding equity interests, the nature of an employee's termination can impact the vesting of unvested equity. Employers should be aware of how the contract addresses equity vesting in various termination scenarios, as it can have significant financial implications for the company.
Repayment Provisions in Employment Contracts: A Guide for Employers
Repayment provisions within employment contracts can be a crucial consideration for employers. These provisions outline the circumstances under which employees must repay certain benefits or amounts if they depart from their positions prematurely or in specific situations. While these agreements can act as incentives for employee commitment, they introduce concerns related to fairness, enforceability, and employee rights. The interpretation and enforcement of repayment provisions can differ significantly depending on the jurisdiction and the precise contract language. Therefore, it is vital for employers to grasp their rights and responsibilities within these agreements, and to exercise caution when attempting to deduct owed amounts from an employee's paycheck, which may not be permissible under the Wage Act..
Meet Our Employment Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts, and helped thousands of clients on both the employee and employer side with severance and non compete review and negotiation, wage and hour, discrimination and retaliation disputes, and advice about employment law generally.
Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped clients with wage and hour disputes, employment discrimination and retaliation claims, review and negotiation of severance and non compete agreements, and advice to both employees and employers about navigating complex employment situations.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna has helped clients with review and negotiation of severance and non compete agreements, wage and hour disputes, employment and discrimination claims, and advice to small business owners about employment law and other business matters.
Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients on the employee and employer side with all varieties of employment law issues, including employment discrimination, retaliation, and wage and hour issues, litigation in MCAD and state and federal courts, and advising employers about employment policies and practices.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped clients with wage and hour, discrimination and retaliation disputes, review and negotiation of severance agreements, and litigation in MCAD and state and federal courts on employment related issues.
How We Can Help
Our experienced team is here to assist employers in understanding and navigating the complexities of employment contracts and termination provisions. Whether you need guidance on drafting contracts, navigating legal changes, or protecting your business interests, we offer valuable insights and expertise. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
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