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3 employment contract changes that make an update a smart move

On Behalf of | May 30, 2023 | Business and Commercial Law

Some companies go years between hiring workers. Others hire all the time, and the process becomes quite streamlined and even repetitive. Businesses may not realize that their contracts are no longer as protective as they once were if upper management doesn’t keep an eye on contractual procedures.

The contract that a company signs with a new worker has a major influence on the rights of both parties while someone is employed and after a work relationship has concluded. Companies that don’t frequently hire or that have hired without incident for years could very well have employment contracts that require updates for optimal legal protection. These three contract revisions might justify an employer reworking and updating their existing employment contracts after seeking legal guidance.

Restrictive covenants

Employers may have included a non-compete agreement in their contract, and this could end up being unenforceable in the future. There are currently discussions at the federal level about banning or significantly limiting non-compete agreements. Therefore, businesses may want to preemptively pivot away from the use of non-compete agreements and begin utilizing other restrictive covenants, like non-solicitation and non-disclosure agreements, to protect the company from employee misconduct.

Social media clauses

The internet has made it easier than ever before for the actions of a few employees to damage the reputation of the company that employs them. Some people will post inflammatory content while listing a business as their employer, leading to controversy. Others might post private company matters in a public forum after leaving the business. Having a social media policy that limits what people can say about their employment and how they engage with the brand online can be very important.

Binding arbitration clauses

Not that long ago, many businesses would include clauses in their employment contracts and other agreements forcing workers or customers into a binding arbitration arrangement should there ever be a dispute. Unfortunately, the abuse of such clauses by some businesses has led to a strong aversion to them amongst top talent. Organizations might benefit from removing such clauses or updating them to require collaboration and mediation before any attempt at litigation rather than a binding arbitration arrangement.

Making updates to an employment contract or completely overhauling the papers that workers sign when starting with the company may allow for more thorough protection for a business as it brings in new talent in an ever-changing economy. Seeking legal guidance is generally a good place to start.