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Non-competition provisions
Employers should be very careful about using non-compete provisions in employment contracts. Many states prohibit employers from restricting an employee’s ability to seek any type of employment (including working for a competitor) after the employment relationship ends.

Confidentiality and intellectual property ownership provisions
Businesses with outsourcing opportunities, as well as those with potential for inventions, intellectual property, or trademarks, should have express provisions on ownership of such property. This will both secure property rights and establish parameters of permissible and impermissible conduct.

Alternative Dispute Resolution (“ADR”)
ADR, generally arbitration, is a method by which the parties can waive their rights to have employment disputes settled in a judicial arena. ADR is usually cheaper and quicker for dispute resolution. Beware, however: Many states do not enforce ADR provisions unless they meet certain procedural requirements.

Choice of law provision.
In general, the parties should decide which law should govern disputes under the agreement. Of course, there must be a reasonable connection between the employment and the state whose law is chosen.

The integration clause.
Integration clauses confirm the extent of the parties’ agreement. That is, where there has been protracted negotiations, numerous drafts, or oral representations, an integration clause specifies which agreements or promises are intended to constitute the final agreement. Generally, employment contracts indicate that the contract “supersedes all prior agreements, written or oral,” “sets forth the entire agreement,” and “may not be modified, renewed, or extended orally.” If prior contracts are intended to survive, the integration clause should expressly say so.

There are many factors to consider when determining whether and how to draft an employment contract. As always, seeking the advice of legal counsel will ensure that your company does not fall into any legal traps.

An associate at Mitchell Silberberg & Knupp LLP, Emma Luevano represents management in a variety of labor and employment matters, including sexual harassment and other forms of discrimination, public policy violations, wrongful termination, and retaliation.

 

 

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