Can an Employment Agreement Reduce the Risk of a Lawsuit?

On Behalf of | Mar 23, 2022 | Employment Law

Employment agreements are, at their core, contractual relationships. These legal documents outline the relationship between business owners and their employees. When used wisely, there are two ways employment agreements can help reduce the risk of a lawsuit.

#1: Use Language in the Employment Contract that Sets Clear Expectations.

Transparency can help to stop frustrations before they start. It is often helpful to include a list of prohibited behaviors, including activities that would result in termination. This way if a business owner needs to fire an employee due to a violation the risk of a wrongful termination lawsuit is reduced. It is also advisable to avoid any language that may have the unintended effect of altering the presumption that employment terms are “at-will.”

#2: Use Provisions that Help Protect Business Interests.

There are certain provisions employers should include within the employment agreement to protect their business interests. These can include:

  • Confidentiality agreement. This provision helps to protect trade secrets held not just by the company but by its customers. Business owners are also wise to include additional intellectual property protections to cover other sensitive or proprietary information.
  • Non-solicitation agreement. This portion of the employment contract lets the worker know that they cannot try to solicit the company’s customers for their own or a competitor’s purposes during a clearly established time period.
  • Non-compete agreement. This provision keeps workers from starting their own business in the same market or going to work for a competitor. Courts generally look for reasonableness when enforcing these agreements, so make sure the scope – in terms of both time and geographic parameters – is not excessive.

Unfortunately, even when employment agreements are written using these guidelines, a disgruntled employee may still file a lawsuit. It is therefore critical to work with employment attorneys who can help you draft sound agreements to strengthen your defense in the event of future claims.