You and a business partner have decided to open a company together. You’ve spent months getting everything prepared, and you’re finally at the point where you want to start hiring your initial employees.
As the two of you discuss this, your business partner says that you’ll need to draft employee contracts. You, however, have not used an employee contract before in your life, and so you assumed that the company would just hire at-will employees. Is there any requirement to draft a contract?
The legal perspective
If you’re wondering about legal requirements and obligations, from this perspective, you do not have to draft employment contracts. You can hire at-will employees who simply agree to work at the business for the foreseeable future. You do not have to use employee contracts at all, and there are no negative legal ramifications if you decide to forgo this step.
That said, there can be some benefits to using employee contracts. For instance, an at-will employee can quit at any time and does not have to provide notice. If you use a contract, though, then the employee has to abide by those rules. If the contract says they must give you two weeks’ notice before leaving their position, then they must do so. An at-will employee would have no such obligation.
These employee contracts can also address many other key aspects of the relationship, such as grounds for termination, nondisclosure causes, tactics for dispute resolution and more details about specific benefits – health insurance benefits, paid time off, a pension plan, etc.
You certainly want to do everything correctly when starting your new business, so it can be helpful to work with an experienced legal team as you move through this process.