At the core of most successful companies is a great team. In order to build and manage that team, you need to develop a strategy for proactively addressing employment law issues. Using tools such as offer letters, employment agreements, separation agreements, and non-disclosure agreements can help you manage your relationships with employees and prevent problems down the road. An experienced Legal Hero employment lawyer can make sure you’re protected in all of those areas, and can also help you navigate any other issues that arise with your employees.
Offer letters are documents that candidates for employment are often asked to sign before starting a new position. They help ensure that the employee and the employer are both on the same page about the position the employee has been offered and the benefits that come with it.
Employment agreements are contracts between an employer and a senior executive or other key employee. These employees are often hired for a fixed period of time and have more complex benefits packages, which makes it important to agree on the specific terms in an employment agreement.
If not handled properly, parting ways with an employee can become a major distraction and can lead to costly litigation. Separation agreements (also known as severance agreements) are used by companies to avoid disputes with departing employees and to protect the company if a dispute emerges later on. In return for additional pay or benefits, employees generally agree not to sue or disparage the company, to maintain the confidentiality of company information, and to assist the company in future litigation.
Employment Law Consultation
Even the best-run companies sometimes stumble when it comes to hiring, managing, and parting ways with employees. Some of the most common pitfalls involve disgruntled employees, confusion about classifying workers as employees or independent contractors, wage and hour issues, and workplace discrimination and harassment. Consulting with an experienced employment lawyer can help avoid problems or prevent a minor issue from becoming a major headache.
Are you ready to speak with an employment lawyer about the employment law issues facing your business?
NDA & Assignment of Invention
Two key areas for many companies are maintaining the confidentiality of sensitive information and protecting and managing its intellectual property. A non-disclosure agreement (NDA) and assignment of invention helps in both areas by prohibiting employees from disclosing confidential information during or after their employment and securing rights for the company in any IP the employee creates while working for the company.
Just like with employees, it is important that companies and the consultants and independent contractors they hire are on the same page about the scope and terms of the project. Consulting agreements (also known as independent contractor agreements) clarify important features of the project, such as the scope of work, deliverables, and payment terms.
What are the common hiring documents for startups?
Most startups ask employees to sign a similar set of documents: an offer letter, NDA and assignment of invention, and a stock options grant (if the employee is receiving equity in the company). Here’s a brief overview of each of these documents:
Offer Letter: a document provided to a candidate for employment that details key employment terms, including salary and benefits, start date, and title and responsibilities.
NDA and Assignment of Invention: an agreement in which the employee usually agrees (i) not to disclose sensitive information about the employer, (ii) not to compete against the company during, or for a period after, their employment, and (iii) to assign to the company ownership of any IP created by the employee while working for the company.
Stock Option Grant: a document that details the terms of the stock options granted to the employee, including the number of shares, the exercise price, the expiration date, and the vesting schedule.
Are you an employer in need of a set of documents to use with your new hires? Or are you an employee that’s received these documents and needs help understanding them?Tell us what you need
What are the differences between employment agreements and offer letters?
Many people seem confused about the differences between employment agreements and offer letters, and in which situations each should be used.
An employment agreement is a contract between an employer and a senior executive or other key employee that establishes the terms of employment, often for a fixed period of time.
An offer letter is a document provided to a candidate for employment that, like an employment agreement, details the key employment terms, including salary and benefits, start date, and title. Unlike an employment agreement, which establishes a set period of employment, an offer letter generally confirms that the employer-employee relationship will be at-will.
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What is the difference between an employee and an independent contractor/consultant?
Determining whether a worker is an employee or an independent contractor (sometimes referred to as a consultant) can have big implications, including:
paying state and federal unemployment tax and social security tax, and contributing to a state workers compensation/disability fund;
paying overtime; and
providing benefits, such as healthcare and retirement plans.
While you should discuss with a lawyer whether a worker should be classified as an employee or an independent contractor, these are some signs that a worker might be a contractor:
operates under a separate business name;
has his/her own employees;
maintains a separate business checking account;
advertises his/her business' services;
is paid per project;
has multiple clients; and
has control over when and where the work is performed.
Do you need help preparing a consulting or independent contractor agreement?Get started
What are the benefits of stock options versus restricted stock?
Historically, stock options have been by far the most common option for startup employee incentive plans. More recently, restricted stock has become an increasingly popular alternative for startups. Here is an explanation of some of the key features of each:
Stock Options: the right to buy a specific number of shares of the common stock of a company during a fixed period of time and at a specified price (the “strike price”).
employees only receive the right to purchase shares, and will only exercise the option if the market price exceeds the strike price
taxed when they are exercised
Restricted Stock: an actual grant of common stock in a company, usually subject to a vesting period.
employees own the shares upon the grant of the restricted stock, subject to any vesting period
taxed when they vest
Do you need help determining whether stock options or restricted stock is the right choice for your employee incentive plan? Or are you ready to set up a plan for your company’s employees? We’d love to help!Tell us what you need
What topics should be covered in an employee handbook?
An employee handbook, sometimes referred to as an employee manual, provides guidance about a company’s policies and procedures and helps ensure that employees know what is expected of them. Any company with more than a few employees should consider creating an employee handbook. Some of the areas typically covered by employee handbooks are: attendance, employee benefits, vacation and leave policies,workplace harassment, equal employment and non-discrimination, employee discipline, grievance policies, electronic communication, and media relations. The reasons to have an employee handbook include:
promoting accountability and adherence to company policies
avoiding inconsistent and arbitrary rules which could hurt morale
protecting against employee lawsuits
Do you need help drafting an employee handbook or improving your existing handbook?Tell us what you need
What are the options for hiring foreign workers?
Hiring employees that are not U.S. citizens can add an additional step to the hiring process. There are a number of business immigration visas that could allow a foreigner to work for your company in the U.S. Click here to learn more about the visa options available to your company.
What are confidentiality agreements and when are they used?
Confidentiality agreements are another type of agreement that is often used with employees and independent contractors. A confidentiality agreement can protect the confidential information provided to those workers in order to do their jobs. Click here to learn more about confidentiality agreements.