5 Points to Consider When Drafting an Employee Agreement

Author: Jorge R. de Armas|August 16, 2016

Should You Draft An Employee Agreement?
5 Points to Consider When Drafting an Employee Agreement

5 Points to Consider When Drafting an Employee Agreement

Should You Draft An Employee Agreement?

Employers often wonder if they should require all employees to sign an employee agreement at the time of hire. Unfortunately, there is no easy answer, as there are both advantages and disadvantages to signing on the dotted line.

Below are five of the most important legal considerations for New York and New Jersey employers:

Employee agreements bring clarity.

A contract that specifies the terms of employment can help avoid disputes because both parties understand what is expected. Employee agreements can address a variety of issues, including benefits and compensation, job responsibilities, length of employment, nondisclosure, and covenants not to complete.

Employee agreements offer protection.

Contracts can be drafted to offer a number of legal protections. For instance, you can limit the employee's ability to compete with your business upon leaving the company, impose confidentiality obligations to protect valuable trade secrets and other proprietary information, ensure ownership of the employee's work product (i.e. inventions, artwork, and other intellectual property), and dictate how disputes will be resolved (mediation, arbitration, etc.).

Employee agreements limit flexibility.

An employment agreement generally limits an employer’s ability to terminate an employee at will by specifying the term of employment as well as the grounds for termination. Therefore, if the employer seeks to terminate the employee before the contract has expired, it may incur costs related to negotiating an early termination.

Employee agreements impose obligations on both sides.

While an employment agreement can impose valuable obligation on employees, employers have obligations too. For instance, all contracts impose a "covenant of good faith and fair dealing." A breach of the duty to deal with employees fairly can serve as grounds for a lawsuit.

Employee agreements should be tailored to the circumstances.

Ultimately, whether or not you require an employee to sign a written contract often depends on the role of the employee with the company. Therefore, it can make sense to require some but not all employees to sign employment agreements. In any case, it is advisable to consult an experienced employment attorney to determine if the advantages outweigh any potential downsides.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Jorge R. de Armas or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.


  • Share:

AboutJorge R. de Armas

Jorge R. de Armas, Counsel, is a member of Scarinci Hollenbeck’s Public Law group. Mr. de Armas has fifteen years of experience and demonstrated ability in the representation of corporate, individual, and government clients.Full Biography

Get In Touch

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Share this article


Get the latest from our attorneys!

Please fill out our short form to get the latest articles from the Scarinci Hollenbeckattorneys weekly on the cutting-edge legal topics.

5 Points to Consider When Drafting an Employee Agreement

5 Points to Consider When Drafting an Employee Agreement
Author: Jorge R. de Armas

Employers often wonder if they should require all employees to sign an employee agreement at the time of hire. Unfortunately, there is no easy answer, as there are both advantages and disadvantages to signing on the dotted line.

Below are five of the most important legal considerations for New York and New Jersey employers:

Employee agreements bring clarity.

A contract that specifies the terms of employment can help avoid disputes because both parties understand what is expected. Employee agreements can address a variety of issues, including benefits and compensation, job responsibilities, length of employment, nondisclosure, and covenants not to complete.

Employee agreements offer protection.

Contracts can be drafted to offer a number of legal protections. For instance, you can limit the employee's ability to compete with your business upon leaving the company, impose confidentiality obligations to protect valuable trade secrets and other proprietary information, ensure ownership of the employee's work product (i.e. inventions, artwork, and other intellectual property), and dictate how disputes will be resolved (mediation, arbitration, etc.).

Employee agreements limit flexibility.

An employment agreement generally limits an employer’s ability to terminate an employee at will by specifying the term of employment as well as the grounds for termination. Therefore, if the employer seeks to terminate the employee before the contract has expired, it may incur costs related to negotiating an early termination.

Employee agreements impose obligations on both sides.

While an employment agreement can impose valuable obligation on employees, employers have obligations too. For instance, all contracts impose a "covenant of good faith and fair dealing." A breach of the duty to deal with employees fairly can serve as grounds for a lawsuit.

Employee agreements should be tailored to the circumstances.

Ultimately, whether or not you require an employee to sign a written contract often depends on the role of the employee with the company. Therefore, it can make sense to require some but not all employees to sign employment agreements. In any case, it is advisable to consult an experienced employment attorney to determine if the advantages outweigh any potential downsides.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Jorge R. de Armas or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.