Does a new hire require an employment contract?

Written employment contracts are not required but make sense in certain situations. Standard contractual terms include:

  • Specified duration – Absent an agreement to the contrary, employment in North Carolina is at will, meaning that either the employee or the employer can end the relationship at any time.  For certain employees, however, it might make sense to agree on a two-way commitment for a certain period of time.
  • Non-competition – Prevents an employee from competing with the employer for a specified period of time after separation.  FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition | Federal Trade Commission.
  • Non-solicitation – Prevents the employee from leaving and trying to encourage other employees and/or customers to follow.
  • Confidentiality – Ensures that the employee will not disclose an employer’s confidential information.

Whether to present an employee with a contract and, if so, what provisions should be included in that contract calls for an individualized determination and careful attention to detail.  Attorneys make lots of money litigating over poorly drafted employment agreements.  In other words, crafting an employment contract is not a DIY project.  Contact your employment attorney if you think an employment contract may be appropriate for your situation.

Should an employer provide selected candidates with a written offer?

It is not necessary to have a written offer of employment to an applicant; however, the more sophisticated the applicant and the more responsibility a particular job entails, the more likely an employer would want to have a written employment contract to protect your company.

What should an employer consider in drafting a written offer of employment?

An employer may consider including the following when drafting a written offer of employment:

  1. Identify the specific position.
  2. Identify the pay rate or salary.
  3. Identify vacation time.
  4. Identify any potential bonus plans.

State as an employee what benefits the applicant may be eligible to participate in, and briefly summarize those:

  1. Include a statement that the employment is at will and avoid using any language that would imply otherwise.  Do not state to imply that the employment is for a defined period of time as doing to will provide employee with the argument that the offer letter is an employment contract.
  2. Make any offer contingent upon executing any non-competition, non-solicitation, intellectual property, and/or confidentiality agreement you may wish to make a condition of employment.
  3. Clearly state that the offer is contingent upon any background screening your company may have instituted, including, but not limited to, background checks, credit checks, drug screenings, and any other background check you may not yet have performed.
  4. If a fit-for-duty physical is required, identify this requirement and make the offer contingent upon passing this physical.
  5. If the employer has any non-competition, non-solicitation, intellectual property, and/or confidentiality agreements, identify these in the letter and send them with the offer. Indicate that the execution of these documents must occur before the applicant becomes an employee and that they must return these executed within a specific amount of time to continue moving the employment process forward.
  6. Include a statement that indicates that the offer letter contains the entire understanding of the employer and employee regarding the terms and conditions of the offer of employment and supersedes any prior negotiations, representations, or agreements between the applicant and employer or any of its employees concerning an offer of employment.
  7. Include an acknowledgment paragraph that states that the applicant acknowledges that they have not relied on any promise, representation, warranty, or other inducement to accept the offer of employment other than the ones contained in the offer letter. Additionally, include that no change or amendment to this offer or its terms would be effective unless in writing and executed by the applicant and an authorized company representative.
  8. Finally, have an execution line for the applicant to sign and return.

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The information herein is not legal advice. The information is in the form of legal education and is intended to provide general information about the matter discussed.  The above is not, nor is it intended to be, legal advice and does not create an attorney/client relationship.