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Should you have employees sign a contract?

Business owners across Fresno have a lot riding on the decisions they make. After all, making the wrong choice can wind up jeopardizing the future of the company. Because of this, it is critical that employers across the state consider carefully their decisions when it comes to how they operate their business, and seek guidance and support when appropriate.

For instance, if you are running a business, you may want to consider having your employees sign a contract, like a noncompete agreement or a confidentiality contract. However, before you make this decision, you will want to consider some of the pros and cons of employment contracts.

Benefits of employment agreements

As an employer, you can use contracts to protect several elements of your business.

  • Confidentiality agreements can keep employees from sharing any information about how your company operates, which can keep this sensitive data out of the hands of competitors.
  • Non-compete agreements can restrict current employees from leaving your business to work for a competitor.
  • A contract can protect ownership of inventions.
  • Arbitration clauses can set rules for how disputes will be resolved.

Drawbacks of employment agreements

There are cons and/or limitations of employment contracts that should not be overlooked or minimized. For example:

  • Potential employees may not want to sign the agreement, resulting in a loss of talent.
  • Employers will need to be prepared to (and have the resources to) enforce these contracts.
  • Unless contracts are drafted properly, they could ultimately be deemed unenforceable.
  • Overly restrictive or seemingly unnecessary contracts and clauses could paint the employer in a negative light.

After you consider the benefits and drawbacks of employment agreements, you can decide whether they should be part of your business operations.

There is a lot at stake when it comes to protecting a company, and finding the right way to do that can be tricky. However, before you draft any contract or have employees sign anything, it can be critical that you consult an attorney to ensure you are not making any costly legal missteps.

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