In football, it seems clear who the employees are, and who the employers are, and everything is out in the open. Unlike at your business, where your employees don’t know what their peers are making, everything is out in the open in the NFL. Everyone knows how much everyone else is making, from the rookies, to the star quarterbacks. But one thing that NFL Players and your employees should have in common is an easy to read, easy to understand, written employment agreement. That’s why it’s the focus of Play #5, “the Employment Agreement.”
Why do you need an employment agreement? Because if you’ve got a small business and you want to have employees, you need to protect your small business from legal liabilities even before they happen. Yes, regulations and rules are a pain, but the penalties for not following the rules are much worse. For your employees, you want to make sure that you understand their concerns and that the agreement between you and your workers will protect both of your interests. Everyone knows where they stand. Your employees will know what is expected of them, and they’ll know exactly what they will be entitled to in terms of pay.
So, what are the offensive strategies? Well, if you haven’t drafted an employment agreement yet, or if you have employees already but don’t have a formal contract, I suggest that you make an appointment to see an attorney quickly and make it a priority. Even a short, bare-bones contract should cover the basics, namely compensation, vacation time, sick-leave, and the policies of the business. If you want your employees to act or dress in a certain way, make sure it’s in writing in the agreement, so that you can control what the workplace of your small business looks like and how it operates. If your employee doesn’t like how you want your workplace to look, then they’ll have to seek employment elsewhere.
What are the defensive strategies? Well, if you have employees that are acting out, make sure the employee agreement doesn’t create new terms or policies that might be considered unfair or unreasonable. If that happens, then they might try and claim that they’re being constructively terminated when they refuse to comply with the new terms.
One last note, make sure that if you’ve got employees working on any kind of commission compensation arrangement, you must put it in writing. A failure to do so can land you in hot water and may subject your company to penalties. It also makes a potential lawsuit significantly more likely to succeed because there won’t be a clear agreement as to what your former employee was supposed to be compensated with for their work.
That’s all for this week. I hope you enjoyed this week’s Play, and stay tuned for next week’s play from the Small Business Legal Playbook! Remember to subscribe and get each play sent to you directly! Until then, may your businesses continue to thrive and your football teams be victorious. Keep playing to win!