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Do I really need to use an employee contract?

As the owner of a business, you certainly understand that you are at risk of a lawsuit from many sources, including your own employees. You may have many questions about the best way to protect yourself and your hard work from unnecessary trouble. While business advocates accept that a solid contract is one good way to ensure you and your employees are on the same page, you may wonder if taking such a step is really necessary.

In most cases, employees do not need a contract because their terms of employment comply with those determined by common law. Depending on the size of your staff and the industry in which you conduct your business, your employees may fall under this category. However, you may also have positions in your company for which a more comprehensive contract is a wise document to have your employee sign.

A contract fits certain circumstances

Weighing whether to include an employment contract with your new hire packets means considering the pros and cons of such a document. It is important to remember that a contract will contain obligations for you to meet, too. You have to decide if it is worth committing yourself and your company to an employee for the duration of the contract. Some instances in which it might be beneficial to have a contract include these:

  • If your employee will have access to trade secrets, private client data or other sensitive information, you may want to use a contract with a confidentiality clause.
  • If you have concerns that your employee will take the training you give and leave for a competing company, you may want to limit the employee's options with a non-compete agreement.
  • If you have found an employee with special skills or in-depth knowledge of your industry, a solid contract can keep him or her in your employ so you will not have to worry about training someone new.

An employment contract can include a confidentiality clause, a non-compete agreement and a separation agreement, but there are other elements that may help make it a document that will cover your bases in case of an employment dispute. For example, your employment contract should contain a description of your expectations and the duties your employee will be responsible for. You may also include details about the benefits you offer. With the assistance of an attorney, you can ensure the contract language complies with Arizona laws.

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