Here are some legal issues to consider when hiring employees.

1. Employee versus independent contractor?

Generally, an "employee" is a person who is hired by another person or business (an "employer") for a wage or fixed payment in exchange for personal services and who does not provide the services as part of an independent business. This definition can be contrasted with an "independent contractor" who is a person or entity who, as part of an independent business, becomes obligated to provide goods and/or services for a price. For example, an expert in computer systems might provide services to several businesses as a "consultant".

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2. Employee benefits
     
There are several different optional benefits that can be provided to the employee, including vacation, sick leave, personal days, and holidays. In addition, the you may consider giving the option of adding other, non-listed benefits, such as flex-time, maternal and paternal leave, and others. Typically employment agreements also contain language that indicates employee benefits may change from time to time. This allows the employer to preserve the option of changing the amount of benefits (for example, the number of vacation days) from time to time without violating the Agreement. Many benefits are also spelled out in detail in an Employee Handbook.

3. Compensation


Wage payments and commission payments to employees must comply with the requirements of the Fair Labor Standards Act, a federal law regarding wages, working hours, and other employer/employee matters. For example, some types of employees must be paid at least twice per month.

In addition, many states also have their own state laws regulating minimum wage and overtime pay. In some cases, state law is more restrictive than federal law. The Employment Agreements and the employment letters in this program do not address the requirements of minimum wage or overtime law. For additional information, contact an attorney or the local office of the "wage and hour" division of the U.S. Department of Labor (or similar state agency).

4. Employment Confidentiality

The Employment Agreement offers a confidentiality paragraph that obligates the employee to protect and not disclose the employer's proprietary or confidential information. "Confidential information" is information that is unique to a particular company. Disclosure of confidential information could harm the employer's business.

The confidentiality paragraph includes an option that describes the employer's rights to take action against actual or potential disclosures. Another option allows for the continuation of the confidentiality provisions after termination of employment.

Court decisions vary from state to state, but some may impose a maximum time limit regarding the time period for which the employer's information must be kept confidential. The confidentiality limitations must be "reasonable" in light of the needs and practices of the employer's business and industry.

5. Include the following in any Employment Agreement:
         a. Confidentiality Agreement
         b. General statement of eligibility for benefits plan
         c. Non-compete Agreements
         d. Rate of pay
         e. Severability clause
         f.  Specified probationary period
         g. Starting date
         h. Statement of at-will nature of employment
         i.  Title of position being offered
         j.  Any other state, industry-specific, or company required information
        k.  Statement indicating that there are no agreements between the parties other than those
             explicitly stated within the agreement.     

Get started Start An Employment Contract Answer a few questions. We'll take care of the rest.

Get started Start An Employment Contract Answer a few questions. We'll take care of the rest.