What Should an Employment Contract Say?

In Michigan, all employees are typically ‘at-will’, meaning they can be terminated at any time. They can also quit at any time. This standard arrangement can be altered by an employment agreement. If you want to have your employees sign an agreement, or if you are the employee, there are certain terms to watch out for.

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Employment agreements come in a variety of formats, all containing different clauses, obligations and consequences. If drafted correctly, they can be powerful tools to ensure both the employer and employee understand the obligations of the other party. However, many times, they can be overly burdensome on the employee.

If a potential employer asks you to sign an employment agreement, it is essential that your read and fully understand the terms. You should always review with an attorney, as certain phrases and clauses may have legal implications.

If you are signing an employee agreement, there are certain terms to review carefully. These can include:

  • Term: How long will you be employed? Is it a one-year contract? A three-year contract? Make sure that you are okay with the length of the deal.
  • Automatic Renewal: It is essential to know if the contract automatically renews, and if so, what terms automatically renew. How long is the renewal period? It is easy to miss the notification date, so you may not want to be locked into another year.
  • Termination: Can you terminate without cause? Can the employer terminate without cause? What do the for-cause provisions say? Pay close attention to these provisions as they can impact your future.
  • Non-Compete: Many employment agreements contain egregious non-compete clauses. We do not recommend agreeing to non-compete clauses as they will limit and restrict your future employment. This can be detrimental if you are not willing to relocate, following separation with your current employer.
  • Locations: What is the scope of the agreement? Is it what you thought it would be? Or does it have additional terms, locations, etc. If so, now is the time to negotiate. Make sure the language is correct.
  • Job Description: Is it accurate? Or does it encompass more than you are willing to take on? Make sure you and the employer are on the same page about your duties, and write them down so that they are specific and only what you are willing to do as a part of your job.

Obviously, there are many other important terms. Make sure the compensation is what you expect and look for any loopholes (for example, can it be lowered because of productivity?). They may also have an alternative dispute resolution clause to avoid litigation.

It is essential that you carefully review the complete agreement. Make sure to walk through it with your attorney so there are no surprises down the line.

If you need help reviewing an employee agreement, contact Rickard & Associates today!

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