In my second year of business, I was contemplating hiring an employee or hiring a subcontractor. I decided on the subcontractor. I had my first heartening experience as a business owner. I had a client that had a high volume of work that needed to be done quickly and a lot of back work. I needed someone to help get everything up to date, so I hired a subcontractor. Being of a naïve nature, I did not have any agreements with her. Well you guessed it; she cut me right out of the middle and took over the account. This was the beginning of compiling contracts for employees and contractors.
This is a difficult topic because not all states will uphold Employment and Non-Compete Agreements. Connecticut is a state that will and they can be enforced. Also you will need a good attorney to review these documents.
Here are some things that should be covered in Non-Competes and Employment Agreements:
When it comes to a Non-Compete agreement be sure you cover:
1. Geographical area – within reason
2. Timeline of non-compete needs to be reasonable
3. Terms of employees/contractors soliciting your clients.
When it comes to an Employment Agreement or Contractor Agreement:
1. At-will employment for employees
2. Termination clause for both employees and contractors
3. Discussion of general duties and expectation
4. A clause to not solicit employment from clients
5. Breach and liquid damages
6. In case of any issues, what state will enforce the breach
The important part of business growth is protecting the time and money you have invested into the building of your company. Employment/Subcontractor Non-Compete Agreements protect that investment. You do not want to be in the job of being a recruiter for your clients nor do you want to continually find clients for your employees to take away.