What provisions should be included in an agreement?
The first is a term provision, in which the parties agree to the term of employment, and this often renews annually. As the employer, you want to include termination provisions that would allow you to terminate for cause, such as conviction of a felony, a material breach of agreement or not performing duties as assigned. From the employee perspective, he or she wants it to include an agreement that if the employer doesn’t think you’re doing your job, it must give you notice in writing and a chance to cure the behavior.
You should also include a duties provision, which puts in writing what is expected from the employee. This can be a tricky area to negotiate, because employers want to define the duties as broadly as possible, while employees tend to want to more narrowly focus their assigned duties. Some employers assume that they are paying employees and they should do whatever they’re asked, and that is generally the case. However, the difficulty can come, for example, when an employee is working in Akron and may not be willing to move to another community to continue doing the job.
Can an employment agreement prevent a departing employee from competing with the former employer?
Having an agreement in place can protect you from the potentially damaging actions of a former employee. If an employee says he’s leaving and taking his biggest client, you can prevent that if you have a covenant not to compete, a restriction that states an employee cannot compete with the company within a certain territory.
Employees don’t like that because it can prevent them from staying and working in the community, but having a non-compete protects the company. Alternately, you may not want to prohibit competition, but you may want the agreement to state that employees cannot take clients with them.
There are different levels of restrictions that you can put in place. The broadest is prohibiting employment with the competition within a certain radius. A less burdensome option is that they can’t divulge confidential information, they can’t solicit other employees to go to the competition with them and they can’t solicit customers to go with them to a new company.
Agreements should also include protection of proprietary information that belongs to the employer, which could include any type of information from which the company derives economic benefit.
Who should draft these agreements?
I recommend getting a professional to draft an agreement that fits your particular circumstances. Documents off of the Internet may be good enough in some states, but in Ohio, if the restricted territory is too broad, or the terms are too long, the court may not enforce the agreement because it finds it unreasonable.
The bottom line is that problems and disputes between an employer and employee can often be avoided by dealing with these issues at the inception of the relationship. It’s much easier to negotiate terms at that time than to negotiate the terms of termination later, which could end up in court.
John Krajewski is the managing partner of Stark & Knoll Co., L.P.A. Reach him at (330) 572-1308 or [email protected].