1. Business license on file in all jurisdictions in which doing business
2. Proper and best legal form of doing business and yearly compliance
3. Federal/State/Local tax compliance
4. Multi-jurisdictional tax compliance
5. Insurance policies - liability and umbrella
6. Worker's compensation
7. Health insurance
8. Contracts with employees
9. Contracts with partners
10. Contracts with suppliers/vendors
11. Office/Warehouse/Other property lease contracts
12. Equipment lease contracts
13. Current licenses and/or compliance records for specialty workers
14. Government regulations posted on site for OSHA/ABC/etc.
15. IP property is recognized and registered
16. Pensions/Disability/Other benefits
17. Arbitration clause and collections policy stated on all contracts
18. "As-is"/Warranties/Guarantees etc. clearly stated on all sales invoices
19. Facilities accessible to handicapped
20. Facilities in good repair/No dangerous conditions
21. Calendar of dates for all required tax filings and other compliance filings
22. Bank accounts and financial data up to date
23. Partnership/Key person insurance
24. Disposition of business assets written plan exists in the event of emergency or death
25. Up to date will on file with attorney (with accurate description of directions for disposition of business)
Showing posts with label Employment Agreement. Show all posts
Showing posts with label Employment Agreement. Show all posts
Saturday, December 4, 2010
Monday, November 1, 2010
More on Employment Agreements
When structuring an employment agreement, there are three key parts: (1) Term of employment, (2) Compensation, and (3) Restrictive Covenants.
1. Term of Employment
A term period provision with a drop dead date is unnecessary for most agreements - employment is often supposed to be perpetual. However, termination for cause can shorten the employment term. Cause can include breach of agreement which may be any misaction like failing to meet expectations, not using full time and energy for the business, committing a crime of moral turpitude, or surfing facebook on a work computer.
A Drop Dead Term ends on a particular date.
An Evergreen Term is an agreement provision that renews automatically for the term specified if no action is taken.
A Sneaky Evergreen Term is like the Evergreen Term but the notice period for taking action is at the beginning of the term instead of at the end. This term is more favorable to the employee once the notice period has passed.
There may also be a temporary leading to long-term employment provision in the form of a probational period that protects both parties.
Finally, there can be a disability provision that kicks in depending on length and severity of disability.
2. Compensation
Compensation is more than salary, it includes benefits and possibly stock ownership. The employment agreement may have a buy back clause to compel the sell of company stock upon termination of employment. Agreements set forth all types of compensation and allow the precise definition of compensation and expectations.
3. Restrictive Covenants
There are three factors that restrictive covenants must conform to:
1. Reasonable Duration
2. Reasonable Territory
3. Reasonable and Limited Scope
Restrictive covenants are equitable remedies that are enforced by judicial exercise (ie, injunction). There is a risk that a judge might interpret reasonableness differently when exercising equitable powers. There may be a legal remedy in the instance of buy out rights for liquidated damages. A court cannot force payment of damages, but it can give the option to pay or not engage in activities.
Types of Restrictive Covenants:
Non-Solicitation of Employees Clause - Must be reasonable in Duration. Held up by courts except when offer is a general solicitation. There cannot be a solicitation of customers either.
Confidentiality Clause - Restricted by all three factors (Duration, Territory, and Scope). This protects information and limits disclosure.
Proprietary information cannot be taken by an employee even if an employment agreement is silent on the matter.
Finally, there must be a separate separation/severance agreement upon termination.
Employment Agreement Form:
1. Term of Employment
A term period provision with a drop dead date is unnecessary for most agreements - employment is often supposed to be perpetual. However, termination for cause can shorten the employment term. Cause can include breach of agreement which may be any misaction like failing to meet expectations, not using full time and energy for the business, committing a crime of moral turpitude, or surfing facebook on a work computer.
A Drop Dead Term ends on a particular date.
An Evergreen Term is an agreement provision that renews automatically for the term specified if no action is taken.
A Sneaky Evergreen Term is like the Evergreen Term but the notice period for taking action is at the beginning of the term instead of at the end. This term is more favorable to the employee once the notice period has passed.
There may also be a temporary leading to long-term employment provision in the form of a probational period that protects both parties.
Finally, there can be a disability provision that kicks in depending on length and severity of disability.
2. Compensation
Compensation is more than salary, it includes benefits and possibly stock ownership. The employment agreement may have a buy back clause to compel the sell of company stock upon termination of employment. Agreements set forth all types of compensation and allow the precise definition of compensation and expectations.
3. Restrictive Covenants
There are three factors that restrictive covenants must conform to:
1. Reasonable Duration
2. Reasonable Territory
3. Reasonable and Limited Scope
Restrictive covenants are equitable remedies that are enforced by judicial exercise (ie, injunction). There is a risk that a judge might interpret reasonableness differently when exercising equitable powers. There may be a legal remedy in the instance of buy out rights for liquidated damages. A court cannot force payment of damages, but it can give the option to pay or not engage in activities.
Types of Restrictive Covenants:
Non-Solicitation of Employees Clause - Must be reasonable in Duration. Held up by courts except when offer is a general solicitation. There cannot be a solicitation of customers either.
Confidentiality Clause - Restricted by all three factors (Duration, Territory, and Scope). This protects information and limits disclosure.
Proprietary information cannot be taken by an employee even if an employment agreement is silent on the matter.
Finally, there must be a separate separation/severance agreement upon termination.
Employment Agreement Form:
Four Myths of Employment Agreements
Should I have an employment agreement with my employees? YES! Do not fall victim to the myths:
Myth 1: Employee has the advantage
Truth: If the employee is valuable enough to hire, then they are valuable enough to lock in with an agreement. Key players should definitely be under an employment agreement. In the case of at-will employment jurisdictions, the relationship can be terminated by either party absent an agreement. An employer would want to protect themselves from an employee leaving unilaterally. With an agreement, the employer can limit and restrict the relationship.
Myth 2: A front-end downer
Truth: An employment agreement doesn't have to be too complicated to do the job. You should be able to work with the employee to negotiate an agreement if you expect to work with them as an employee in the future. If the potential employee is uncomfortable negotiating the agreement, pay for an attorney to represent them.
Myth 3: It is easier after the honeymoon
Truth: After the employee has proven their worth they will only have more power to negotiate. Create the agreement at the beginning with the protective measures in place to ensure future quality work.
Myth 4: Long and legal
Truth: It can be short, and length and legal complexity should not scare the employer. Work with an attorney. If your agreement will be a standard for future employees you can go from the initial advice you received.
Myth 1: Employee has the advantage
Truth: If the employee is valuable enough to hire, then they are valuable enough to lock in with an agreement. Key players should definitely be under an employment agreement. In the case of at-will employment jurisdictions, the relationship can be terminated by either party absent an agreement. An employer would want to protect themselves from an employee leaving unilaterally. With an agreement, the employer can limit and restrict the relationship.
Myth 2: A front-end downer
Truth: An employment agreement doesn't have to be too complicated to do the job. You should be able to work with the employee to negotiate an agreement if you expect to work with them as an employee in the future. If the potential employee is uncomfortable negotiating the agreement, pay for an attorney to represent them.
Myth 3: It is easier after the honeymoon
Truth: After the employee has proven their worth they will only have more power to negotiate. Create the agreement at the beginning with the protective measures in place to ensure future quality work.
Myth 4: Long and legal
Truth: It can be short, and length and legal complexity should not scare the employer. Work with an attorney. If your agreement will be a standard for future employees you can go from the initial advice you received.
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