Employment Contract Mistakes Every Small Business Owner Should Avoid

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Employment Contract Mistakes Every Small Business Owner Should Avoid

A business often starts simply with a great idea, but in order to move beyond just an idea, owners then must launch, grow, and potentially scale the business. As such, a successful small business involves many moving parts and the right team is critical to this process, especially since they will be the ones helping to sell and implement the idea.

Focusing on all of these moving parts may mean an owner unintentionally overlooks potential legal concerns. And since employment contracts can be critical to limiting future costs, and protecting the business, we’ve compiled a list of four common mistakes to avoid in some employment contracts.

First, employment contracts should have valid non-compete and non-solicit agreements. This area of law can be complex and is currently evolving. However, valid clauses can prevent a company from losing potential clients and/or profits, and the clauses can potentially limit future legal costs.

Second, make sure that all contracts are between the proper legal name of the company and the employee. Also, make sure to sign all employment contracts as an agent of the company. This could help limit an owner’s personal liability for any alleged or potential breach of an employment contract. Signing as an agent of the company could also help limit personal liability for an owner if an employee is negligent or injures someone else.

Third, make sure to properly distinguish between an employee and an independent contractor. Calling someone an “independent contractor” does not make it true. This video [http://www.chicagosmallbusinesslawyerblog.com/2014/06/5-signs-your-contractor-may-be.html] could help in determining what role an individual has with your company.

Fourth, protect your brand. Be sure to put in place confidentiality and non-disclosure clauses in agreements to help prevent a former employer – or competitor – from stealing your company’s trade secrets.

These potential legal issues can be complex and time-consuming. Consulting with an attorney can be worthwhile to minimize future costs while also allowing an owner to focus on all those other moving parts..