Overview of Employment Agreements

March 2, 2018

Several types of agreements are generally categorized as “employment agreements”. The first type are those agreements between organizations and those who are generally considered to be “employees” of the organization.  The second category of agreements are between organizations and those who are generally considered to be “independent contractors or consultants” to the organization.

The organization’s objective in using such agreements is to define the relationship and protect the organization’s proprietary business information, intellectual property and technology, and provide ownership and protection of the work product generated by the employee/consultant in the course of his duties for the organization.  These objectives are addressed through one or more of the following undertakings depending upon the scope of the work to be performed and the importance of intellectual property and proprietary business practices, manufacturing and product technology, and customer and vendor information to the success of the organization’s business.

To accomplish these objectives, the agreement for employees/consultants usually contains one or more of the following:

1. The obligation of the employee/consultant to maintain the organization’s proprietary information in confidence and to refrain from using it for purposes other than the organization’s business;
2. The obligation of the employee/consultant to disclose and assign to the organization inventions and developments made by employee/consultant in the performance of the agreement; and
3. For some agreements which are usually specific to employees, the explicit obligation of loyalty to the organization during the course of employment.
4. In some cases where there is justification based on the value of the proprietary/business information, additional “non-compete” obligations are included which preclude employment with competing entities for a limited period of time in specified geographic locations.
5. In addition to the above, employment-specific topics such as job location and duties, pay rates, term and termination of employment, dispute resolution, applicable law, etc. are often addressed.

The foregoing are just a few of the topics to be addressed in various types of employment agreements, which are generally supplemental to the matrix of applicable state and federal laws which provide for, and in some cases limit, the scope of the rights and obligations in employment relationships.

Many employers develop a standardized approach to agreements with employees and consultants which are tailored to meet the specific company needs for their particular business while complying with applicable federal and state laws in the states where they conduct business.

For more details on this topic or other employment-related matters, please contact Attorney Bill Beach, bbeach@rcolaw.com, at RCO Law.