“Surgery. Operations are now banned. As long as you are an employee here, you need all your organs. You should not consider removing anything. We hired you intact. To have something removed is a breach of employment.”
Although still rare in the overall workplace, employment contracts are being used more and more in the IT industry and other professions where trade secrets and confidential information is important. A good agreement is more than just a basic listing of facts about a job; it’s a set of guidelines to illustrate the duties and rights of each party to it. Good employment contracts include the essential terms – the salary to be paid, the length of employment, and the grounds for termination-in clear language.
Like other major parts of running a business, the creation and contents of employment contracts are regulated by state and federal laws. This is to allow businesses to use good practices while ensuring that the basic rights of the employee are not violated. For example, most states, including New Jersey, say that employment contracts are “at will” unless otherwise provided. This means that the employee can be terminated for any reason, or no reason, as long as the reasoning behind the termination doesn’t discriminate against a protected class (such as members of a racial or gender minority).
Many contract terms that employers tend to favor vary in effectiveness (or even legality) depending on the state whose laws govern them. One popular provision is the non-compete clause, which prevents recently terminated employees from joining a competing business within a specific number of years. New Jersey courts say that non-compete clauses are enforceable if the employer terminated the employment. The courts can also modify existing, but potentially infringing, clauses (like the “term” above), as long as the modification is reasonable. Factors that can determine reasonableness is the clause’s duration and geographical scope, and the nature of the former employee’s job (such as whether he or she had access to trade secrets, or whether they were entry-level positions).
Another popular employment contract provision is the non-disclosure clause, which protects classified information (which includes technical data and specialized processes) from employee exposure. In most jurisdictions, information that amounts to a trade secret often warrant such a provision. However, employers may not restrict terminated employees from using more generalized knowledge and skills gained from their experience working for the business. Permitted, for example, is a business stopping a former employee from “stealing” the business’s clients by including a non-solicitation clause. Also, non-disparagement clauses are used often and allowed, especially but not limited to contracts in the entertainment industry. These terms limit employees’ outside statements about their employer to those that are positive or neutral in nature. Many times, an employee’s silence is in exchange for some monetary benefit in the contract.
Employers have many tools at their disposal to protect the best interests of the company- but they must take care when drafting employment contracts, to prevent an improper imbalance between the company’s interests and employees’ rights. In the best employment agreements, both employer and employee has certainty about their rights and responsibilities . Loree Varella, Rutgers School of Law Newark candidate for a JD degree in May 2016 collaborated with me on this blog. She is Associate Editor of the Rutgers Computer and Technology Law Journal and Managing Research Editor of that publication.