Hiring Toolkit Item No. 1: Employment applications
Think about requiring all prospective employees to complete an employment application. The application solicits a lot of information that will help you decide whether or not to hire the person. However, be careful regarding what is included in the application; remember some questions are illegal to ask. A good employment application asks for the following information:
- Legal right to work in the U.S.
- Consent for the company to check references
Attach the prospective employee’s resume to the application and keep these on file. This can be helpful later if, for example, you decide to fire an employee after discovering he/she lied about the information on the employment application form.
Hiring Toolkit Item No. 2: Offer letters and mistakes to avoid
When you find the applicant who seems to meet your needs, you are ready to make an offer. Although you can do this over the phone, it is better practice to put it in writing to avoid miscommunication or misunderstanding. Include the following items:
- Employment-at-will status
- Various other legal provisions to protect you and your company
Be careful not to mislead the applicant or promise something you can’t deliver. For example, avoid statements that give the applicant a false sense of security, or what might be construed as a long-term promise of employment. Stay away from phrases such as “We expect you will have a long and prosperous career here,” “You can expect your salary to increase by X% each year,” and “After a probationary period, you will enjoy the benefits the company provides to its long-term employees.” Also avoid offering different benefits to an applicant than those available to other employees. Your current employees may see this as discriminatory and take action accordingly.
If you intend to offer stock or stock options, make sure it vests, or is earned, after some significant period of continued employment. If you plan to offer a commission, bonus or profit-sharing arrangement, make sure the percentage or amount is reasonable and does not make the employee unprofitable for your business.
Hiring Toolkit Item No. 3: Employment agreements
Employment agreements are not necessary for most employees, though you may want some high-level employees to sign one. A well drafted employment agreement will cover the following items:
- Job position and whether the employer has the right to change the position
- Salary, bonus and benefits
- Whether the employee gets stock or stock options
- When the employer can terminate the employee for good cause, along with a definition of what good cause means
- When the employer can terminate the employee without good cause and what severance payments the employer will provide
- Confidentiality obligations
- Where and how disputes will be handled
Hiring Toolkit Item No. 4: Confidentiality and invention assignment agreements
Your employees, especially in high-tech businesses, have access to a lot of the company’s confidential information. In addition, you expect your employees to come up with ideas, work product and inventions that are useful to your business. To ensure your employees keep the company’s proprietary information confidential, you should require them to sign a confidentiality agreement. Either as part of the confidentiality agreement or as its own agreement, your employees should also acknowledge and agree that the ideas, work product and inventions they come up with belong to the company, not them. The following key provisions should be included:
- The employee cannot use any of the company’s confidential information for his/her own benefit or use.
- The employee will promptly disclose to the company any inventions, ideas, discoveries and work product related to the company’s business made during the period of employment, and that the company is the owner of such inventions, ideas, discoveries and work product.
- His/her employment with the company does not breach any agreement or duty he/she has with anyone else, nor can he/she disclose to the company or use on its behalf any confidential information belonging to others.
- The confidentiality provisions will continue after his/her termination of employment.
- The agreement does not represent any guarantee of continued employment.
Hiring Toolkit Item No. 5: New employee paperwork
When a new employee joins the company, make sure to have all the appropriate paperwork ready for him or her to sign, preferably on day one, including the following:
- Company employee handbook
- Confidentiality and invention assignment agreement
Hiring new employees can be an often arduous and sometimes unexpected process. Knowing that you have these items accessible and ready to go will help the situation seem less intimidating and will ensure that your company is operating at full capacity as soon as possible.
Stacy is a founding member of BauerGriffith, a business law firm providing high quality legal and business counsel to a wide array of clients, with an emphasis on non-profit organizations, small business and individual planning clients. She serves as outsourced corporate counsel for diverse clients, partnering with executive management to design, plan and implement stated and defined business objectives within legal parameters.