Why Your Employee Agreements Need an Annual Check-Up

Do you remember the last time you had your employee contracts reviewed by a lawyer? Hopefully, in the very least it was at the time they were created! Don’t get us started on the number of clients who previously created and relied solely on their own employment agreements.  

As laws are constantly changing, we always recommend giving your employment agreements an annual check-up to see how they are fairing. Between legislative changes and new emerging court precedents, you want to ensure that your contracts stay current.

For example, did you know that last year the Courts ruled that you couldn’t terminate an employee for cause without pay? The slim exceptions to this rule include the employee committing serious fraud – but even in extreme cases you should be consulting a legal expert. If you have a clause in your agreement that denies notice and severance to an employee being terminated for cause, it will not be enforceable. Moreover, the inclusion of this clause actually results in the invalidation of the entire employment agreement! Yes, it invalidates the very contract you had created to protect your interests and limit your notice pay obligations. This means you could pay a lot more out of pocket when you terminate an employee then if your employment agreement had been enforceable.

What about a non-compete clause – have on of those in your contract? Courts have also ruled that non-compete clauses, where you prevent your employee from competing against your business after they leave, are also unacceptable.

It even matters what date you have your employee sign their employment agreement. Did you also know that if you have your employee sign their employment agreement on or after their first day of work that the agreement is not enforceable? We won’t get into the legality of “why” in this blog, but it’s definitely not something you want to happen.

While we have only scratched the surface with the many pitfalls that come from an outdated and poorly drafted employment agreement, all we can say is get yours checked out before its too late.

Robin K. Mann, Associate Lawyer