3 Types of Contracts/Agreements Your Company Should Be Using
There may have been a time where a handshake and promise was good enough to trust that someone would keep their word, but modern businesses live and die by contracts.
Unfortunately, you simply cannot trust that people will always do what they say they will do or what you instruct them to do. You need concrete and thorough contracts and agreements in place to ensure that your company’s interests are always protected.
Below we’ve detailed three contracts and agreements that your company should consider utilizing right away.
Employee AgreementsNot every company needs to utilize individual contracts that dictate the terms of employment for each new hire, but there are certain agreements that every company should have their new employees sign in order to ensure they are protected. Firstly, you should utilize an at-will agreement that clearly states that your new hire’s employment can be terminated at any time for any reason. New employees should also sign non-disclosure and non-compete agreements. The first will help protect your company’s sensitive information and intellectual property, while the latter will help prevent employees from being vultured by rival companies or leaving your company to build a rival business themselves.
Vendor AgreementsMost companies will utilize vendor services in some form or another. Restaurants, for example, require vendors to provide them with ingredients to create their dishes and drinks to serve. Others may utilize vendor for things like toiletries or office supplies. You need to have strong contracts in place with all of your vendors that clearly defines the parameters and expectations of your relationship. This will ensure you have recourse available to you if there is a disagreement or the vendor’s performance declines.
Independent Contractor AgreementsUtilizing independent contractors provides businesses with much needed flexibility and affordability without the strain and complication of hiring on a full-time or part-time employee. However, if you misclassify someone who should be a standard employee as an independent contractor, you could face severe penalties from the IRS. You need to use written agreements with your independent contractors that explicitly state the nature of your relationship and the role each party has in order to avoid an independent contractor being classified as an employee. For instance, the independent contractor needs to be autonomous, preferably provides his/her or tools and equipment to perform the services and numerous other factors that go into whether or not an independent contractor is truly such or an employee. Either way, independent contractors should also be required to sign confidentiality and non-compete/non-solicitation agreements if they have access to sensitive company information.