Contracts are the glue that hold a business together and allow a business owner to successfully run his business. A contract is a promise that is enforceable by law. When it comes to managing employees, a well-written employment contract solidifies the terms of employment in advance in a way that it is enforceable in the event of an employment dispute.
California is an employment-at-will state in which, in the absence of an express agreement, either party may change the terms and conditions of employment for any reason, or terminate the relationship with or without advance notice. This at-will presumption is a default rule that may be modified by contract.
As in any aspect of the business, providing a concise framework of employee rights and obligations, the work to be performed and the terms of employment, creates a sense of stability as well as a standard of excellence that not only becomes the backbone of the company, but also gives the company a competitive edge as it attracts top talent.
Because crafting a good employment contract can be challenging, the Orange County business owner can benefit from sound legal counsel in avoiding common pitfalls found in California employment law.
Avoiding the pitfalls
Some considerations that will prevent legal jeopardy when writing up employment contracts include making sure that the contract does not infringe upon employees’ rights as protected under federal and state laws. It is also important to be aware of any restrictions placed on noncompete agreements by state law. California does not recognize noncompete agreements, but if the contract was made in another state and includes a “choice-of-law” provision, it may be enforceable.
Misclassifying employees as independent contractors is a common mistake that can create liability later on. The employer controls the work hours, location and duties of an employee. If the business owner treats independent contractors as employees, they will be legally classified as employees and allowed the same rights and protections.
An employment contract should have an offer of salary and benefits, the acceptance in the form of the employee’s signature, and the consideration, which is the payment in exchange for work. It is the signature that is the most important part of the agreement, and the employee should not begin work before all paperwork is completed.
Finally, upholding the terms of the agreement is a reciprocal responsibility. Both sides are equally accountable for compliance with terms that should be precise and enforceable.
