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3 reasons to update your company’s employment contracts

On Behalf of | Feb 14, 2023 | Employment Law For Employers |

The terms that you include in your employment contracts determine what responsibilities you have to your workers and also what they should do for your organization. You can potentially include provisions in an employment contract that will protect your business for several years even after a worker leaves the company.

It is a relatively common practice for businesses to use the same contract for all of their employees, year after year. However, your employment contracts will be most effective when you occasionally update them. What are some of the circumstances in which you may need to make significant changes to your organization’s employment contracts?

1. When state or federal employment laws change

Sometimes, new laws go into effect that alter your responsibilities to your workers. For example, the Federal Trade Commission (FTC) has recently brought up the idea of banning non-compete agreements at the federal level. Employers will need to change their contracts following the implementation of such a ban to remove clauses that will no longer be enforceable in which might invalidate their contracts with their workers.

2. When company practices change

Have you stopped simply manufacturing products and started a research and development team? You may need new contracts that prioritize the protection of your company’s trade secrets. Anytime that there is a significant shift in the kind of work your company performs, you may need to make adjustments to your employment contracts better protect the business.

3. When the employment market changes

Perhaps your industry sees a massive rush of unionization, which changes the kind of employee benefits you provide for your workers. Maybe changing expectations in your industry will require that you offer bonuses as a retention incentive so that keep your staff for longer and reduce your operating expenses.

Continuing to include outdated terms in your contracts can make you seem like a less-than-ideal employer. For example, while alternative dispute resolution is still a good inclusion in your employment contract, you may want to shy away from clauses mandating binding arbitration, as many workers will avoid such terms.

Every organization would benefit from occasionally reviewing and updating its employment agreements and other contracts to sure they offer optimal protection. Adding the right terms to your organization’s employment contracts will reduce your company’s liability and help maximize its legal protections.