Before onboarding and training new employees, ensure they complete their paperwork correctly and establish an employee contract. One of the essential pieces of paperwork is the contract that an employee signs, which details the conditions of their employment with your company. Any mistake in this contract could result in an employment practices liability issue or even litigation. If you want to implement an effective employment practices strategy, you can start by ensuring that your employment contracts contain the following four essential elements.
Essential Job Details
Every employment contract needs to outline the job’s details thoroughly. The job’s title, description, requirements, and duties should be in the contract. The contract should briefly review the information initially contained in the job description. In addition, there should be a description of the procedure for performance evaluations. The employer should explicitly note exceptions in the contract.
Benefits and Pay Rate
Employment contracts must also indicate the wages and benefits employees will earn for their work. Don’t make the common mistake of asking an employee to sign a contract that says compensation is “TBD.” The document’s text should explicitly state the hourly rate or annual salary that an employee earns in addition to any bonuses or incentives they are eligible to receive. If there is a standardized procedure for incremental raises, it is noteworthy to describe the process. Conversely, if your company determines all raises, you should state it.
Employee Classification
You should list the classification of the position on the employment contract. It is vital to consider this carefully — misclassifying an employee can land a business legally and financially in hot water. In addition to the employment practices liability that may emerge, noncompliance can invalidate insurance coverage and result in significant tax liability. Research the distinction between an employee and a contractor before writing the contract according to the correct classification.
Schedule and Status
Finally, an employment contract should indicate whether an employee is part-time or full-time and temporary or permanent. If the business expects the employee to work part-time hours, they should indicate approximately how many hours each week this will be. Similarly, if the business expects the employee to be available on-call outside their scheduled hours, they also need to note this. The contract should specify the period of employment for any employee the business hires temporarily. Completing appropriate tasks like this can prevent your business from facing any liabilities.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.
