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How contracts protect your company when hiring workers

On Behalf of | Feb 2, 2023 | Business-Employment

Every new staff member that you hire can substantially increase your company’s operational abilities. However, the more workers you have, the greater the possibility of a conflict, a lawsuit or some other issues affecting your business’s operations or profit margin. A worker could also make mistakes during their training period that affect product quality or client relationships.

New employees are a source of business liability, but you have the means of protecting your organization from the first days of their employment. In addition to providing thorough training, employers can also negotiate contracts to protect themselves.

What kind of inclusions in employment contracts and worker handbooks can protect employers against the risk involved in hiring someone?

Details on performance, compensation and discipline

An employment contract or worker handbook needs to include details that allow someone to do their job appropriately. Individuals should know what tasks they need to perform in the standards that the companies will use to evaluate their job performance.

Information about the disciplinary standards for those with behavioral or performance issues can also help limit a company’s liability if it has to take adverse action in the future. Finally, companies should be very clear about compensation, from base pay and benefits to  severance pay.

Appropriate restrictive covenants

Especially if you want to hire people to work in your research department or on your sales team, you may need to protect your company against misconduct and unfair competition in the future by adding restrictive covenants to their contracts.

A non-solicitation agreement could prevent your employee from hiring your other staff members or trying to close sales with your company’s clients after they leave their employment with your organization. Non-compete agreements, which are technically still sometimes enforceable in Minnesota, could also prevent someone from starting a competing business or working for a direct competitor after taking a job at your company.

Anti-harassment and discrimination policies

Being very clear about what standards of behavior you expect from your employees can reduce the likelihood of a worker’s misconduct leading to claims against your business. When your company has an established policy against discrimination and harassment and also provides support for workers who alleged misconduct, it will be harder for upset workers to try to hold your business financially accountable for the behavior of individual coworkers.

The exact needs of your organization will depend on your business model and the position you need to fill. Adding the right terms to your employment contracts will significantly reduce your company’s liability related to staffing.