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“This is a great tool for freelancers, as well as business and law firms of all sizes.”
-David Perla, CEO, Pangea3
As Covered On:
Complete Description. This Employment Contract Template is a great way for a company to protect itself when hiring a new employee, and explains protecting confidential information from public disclosure, unfair competition, poaching employees, intellectual property developed or brought by the employee to the company, and general boilerplate for an employment contract template.
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EMPLOYEE CONTRACT TEMPLATE EXPLAINED
It’s always a thrill to start a new job. The office will never seem nicer than on that first day, and all your new colleagues greet you with smiles as you plunge into your responsibilities with excitement and vigor. If you are like most people, you probably held a number of jobs over the years, and each time signed a slew of paperwork and in order to get started with the human resources office. You likely have no memory of the provisions of the forms you hurriedly scrawled, probably dashing them off quickly so you could get back to the real work. In particular, you probably unknowingly signed an at-will contract of employment template.
It’s actually a smart idea to learn the essential points covered in this type of agreement, so when you hire employees you know exactly what provisions to care about in an employee contract. In these employee contract forms, you’ll see a focus on these sections:
- Employee Poaching
- Unfair Competition
- Copyrights, Patents and Trade Secrets
Non-Disclosure. This kind of obligation forces the employee to not disclose any of the company’s key, proprietary data and materials with anyone outside the company. Sometimes the employee can deal with a subcontractor, or a representative, but only if pre-approved by the employer. The new employee also should not share restricted information with anyone other than as necessary to perform employment duties. For instance, you wouldn’t want your top software programmer to give your coding trade secrets to your junior marketing specialist. Sometimes employees must also include a legend on each confidential document that says that the material is owned by the employer and is confidential and proprietary. You also want to make absolutely sure that you review the materials the employee brings to the company at the beginning and make sure there aren’t any alarm bells as to receiving restricted data from the new employee’s previous employer, who then might want to sue your company. A new employee should be on the hook to disclose this kind of restricted data up front so that you can avoid a major dispute later.
Employee Poaching. What if your new employee leaves unexpectedly to go to a competitor, or starts her own competitive company, and steals away a large number of your best performers? You can prevent this from happening for a little while by inserting a non-solicitation clause that requires this person to stay away from the people that remain with your organization. Sometimes companies make mistakes and draft these kinds of provisions to be all-encompassing, preventing anyone from ever asking an existing employee to leave their place of employment to work anywhere else in the world as a competitor. Generally, a judge will not enforce those kinds of clauses in a temporary employment contract. The judge is much more likely to side with you, though, if you only make this clause apply for twelve months or so after the end of the standard employment contract. Also, to be fair, you might want the former employee’s new company to be free to hire away your employees that apply through a general posting they might see online. After all, you yourself couldn’t always keep track of the job history of every new hire by every manager throughout your organization, could you?
Unfair Competition. As noted above, sometimes employees walk away from their employers and start competing with them, taking your customers along the way. You can avoid this kind of situation in the short run by including a non-competition clause which states that for a certain time period, and within a certain geography, the former employee won’t compete with you. Of course, these days the geographic restriction is less helpful because people do business worldwide via online marketing, but given that most people like to live in the same country as their employer, and you know where your competitors reside, you can usually tailor this provision properly in your employee contract template. Bear in mind that you definitely want a local employment law attorney to weigh in on these kinds of provisions, because states vary greatly as to what kinds of time periods and geographic restrictions they want to enforce.
Copyrights, Patents and Trade Secrets. Most employee contracts use broad language that captures all work created by the employee as owned by the corporation as proprietary property. But, often times, new employees bring old work with them from their previous engagements as consultants and workers for other employers. So you want a provision in your employee contract form that makes the new employee share all of this work at the beginning, determine which materials are owned by a third party company, and which ones are owned by the new employee, and be sure to work out with this individual who will own these contributions going forward. Too often companies push new employees to assign away all of their rights in these pre-existing materials, but this can be offensive to an individual who created the work on his own time and might need it in the future if the employment relationship doesn’t work out. A more flexible solution might be to execute a license agreement that will provide the company with permanent use of the materials whether or not the new employee ultimately ends up leaving.
Ultimately, smart companies make sure to cover key non-disclosure duties, employee poaching, unfair competitors and proprietary rights at the start of the employee contract relationship, so they can outperform their competitors with superior human resources practices embedded in their standard employment contract.
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