Your company’s employment contract will include important information that dictates how you relate to your staff during and after their employment with your company. These contracts outline the terms of employment, benefits, compensation and expectations for workers.
Many companies use employment contracts to protect their business interests by requiring a non-compete agreement from new staff members or having workers’ execute non-disclosure agreements that will prevent them from sharing what they learn while working at the company or posting damaging information on social media.
Beyond establishing your company’s expectations for your new help, the contract that you execute will also outline the nature of your relationship with individual members of the staff. When companies bring on new workers, they can do so as either employees or contractors. Your business should do its best to properly classify newly hired workers before they execute any paperwork.
Know the difference between a contractor and an employee
To properly classify your staff, you must understand the employment relationships that you might have with them. An employee is someone who works directly for your company. They are part of your daily flow of operation and report directly to management within the company. The company has the right to micromanage the workflow and schedule of its employees. They typically also need to provide their employees with all necessary safety equipment.
Contractors, on the other hand, work for the company but only in the capacity of completing specific tasks or projects. They are essentially their own company and have more control over when they work and how they complete their tasks. They also typically provide their own equipment and materials.
The final major difference between a contractor and an employee is that contractors pay their own employment taxes, while employers must contribute employment taxes on behalf of their salaried or hourly workers. Contractors and employees often have different costs for business in terms of taxes and insurance.
Employment contracts are better when more specific
The more specific and detailed your employment contracts are, the more protection they extend to your company. Ensuring that your company has accurate and thorough contracts and that you properly classify your relationships with your staff can go a long way toward avoiding potential financial headaches in the future.
Misclassified employees, for example, may be able to take action against your company for lost wages or benefits. Improper work contracts may not offer you the protection you intend, which means they may not hold up in court if you have to take action against an unscrupulous former worker.
Whether you need to revise your existing work contracts or create a new one, consulting with an experienced Utah employment and business law attorney will help you avoid the common pitfalls of employment contracts and contractor contracts.