Your employment contracts can protect your company from one of its biggest risks. The people you hire can make mistakes that affect your company’s reputation. They can engage in misconduct that leads to a lawsuit against the business. They could even take your best ideas and seek out a job with your direct competitor.
Hiring the wrong person could cost your company many thousands of dollars. However, including the right terms in the contract you sign with your workers can protect you. A carefully drafted employment contract will help you minimize your liability when you hire a new person.
How employment contracts help
Contracts outline your expectations for an employee and also their obligations to you. You may include rules about discipline and grounds for summary termination. Restrictive covenants like noncompete agreements are a popular way for a company to limit how much risk they have when bringing on a new employee.
However, you may have heard that noncompete agreements are not enforceable in California. Is that true?
The California courts do not enforce noncompete agreements
Court precedent and state law in California combine to make noncompete agreements unenforceable. However, many other jurisdictions do enforce noncompete agreements, especially when a worker has access to trade secrets and other company intellectual property.
If your business operates in other states or countries, you can potentially include noncompete agreements in the contracts with your employees in those locations. Including restrictive covenants in your employment contract can also be a way to deter employees from potential misconduct.
Being selective about what you include in your employment contracts will help ensure that they optimally protect your company. Learning more about employment laws in California and beyond can help your company expand its staff without increasing its risk.