Thursday, June 4, 2009

When Hiring, Consider Firing First

Beginning With the End in Mind

When hiring new staff, few managers think about the possibility they may have to fire or lay off that employee. Yet, as with prenuptial agreements, the best time to prevent problems at separation is when the relationship begins.

Even though you hire someone without an employment contract (known as “at will employment” in many states), you can still have other agreements that are enforceable but do not change the nature of the employment into a contract. Some companies actually go to the extent of having employment contracts with everyone for two-week terms, renewable every two weeks unless and until a violation or termination event occurs. For the purposes of this article, I will use “employee agreement” to mean terms other than length of employment.

Your employee agreement should address issues such as those that may arise before, during or after employment. Make the agreement a condition of hiring, to be clear to everyone how important the terms are. Get existing employees to sign one, such as to continue employment at their anniversary, upon promotion or to receive a raise. That satisfies the need for “consideration” unambiguously.

A Checklist

1. Acknowledgement that employee has received and agreement that the employee will read and adhere to policies and procedures. Can you show an auditor that your employees actually received their policy manuals? This is an annual agreement in many places, coinciding with the delivery of updates to the organization’s written policy manual. Get a signature that establishes the employee received his or her copy and promises to read and abide by them. It is not essential to proving those facts, but it helps.

2. Agreement that the employee will not violate criminal laws while performing job duties or on worksite or using employer property. It seems like this would be unnecessary. Why do you need someone to agree to avoid actions that are already illegal? Yet, as many international businesses know, it is essential that the organization show that illegal behavior was not permitted, condoned, promoted or implicitly rewarded. How would you show that? Start with policies that expressly prohibit illegal behaviors, from outright bribes down to cutting regulatory corners, then continue hammering the message with periodic compliance reviews and training on the rules applicable to their jobs. Together, these will help your organization defend itself should someone go astray.

3. Agreement that the employee will keep employer's and customers' secrets. This provision deserves careful drafting. You may have additional responsibilities to accommodate on confidentiality due to professional standards or customer contracts. “Secrets” is a term that means different things in different contexts. Try to define it anyway. Be specific AND general. Supplement with training and periodic reminders of how easily secrets are leaked and stolen, as well as the potential damages that can result.

4. Agreement regarding ownership of intellectual property rights for works created during the course of and term of employment. It is as old as artistry itself: the debate over who owns works created by someone while in the employ of another. Laws attempt to clarify the matter, but sometimes do the opposite. Even worse, some contracts applicable to the organization may contravene local laws where the employee is working or the organization’s agreements with its staff. Do not limit your concern to patents, for copyright is the most common protection and applies to more work than others, especially in today’s “information age” organizations. And keep in mind the growing blur between work and non-work areas of your employee’s lives. What about ideas or blog posts written at 2 a.m.?

5. Agreement that the employee will cooperate in compliance reviews and investigations of compliance issues during and after employment. Get this one up front and remind every hire how important compliance is to you and your organization. Nothing positive is gained from being unclear here. By stating expectations and values at the beginning of the relationship, you will be more likely to see those values throughout the term.

6. Agreement that the employee will submit to additional screening deemed necessary by employer to perform job duties or enter certain work sites or work on certain projects. More and more employers require pre-hire drug screening. Those in sensitive industries have policies for additional screenings after start date. You generally want everyone on notice that you may require an individual to submit to screening upon ANY indication that his or her performance may be impaired. Whether you ever need to use this or not, put them on notice at the outset and help avoid problems later.

7. Agreement regarding use of company property and facilities. What happens if the employee loses his or her company-provided smart phone? What if client files disappear the last week of employment?

Important Notes

This article is not intended to give legal advice to anyone. It is merely to serve as a discussion-starter. You should consult with qualified legal counsel regarding the specific laws in your area, because they vary extensively from state to state. If your employees have a collective bargaining unit, of course, other rules and limitations will apply, but the guidance above may still be within your reserved management powers if not specifically addressed in the union contract.

For a guide when settling employment law disputes, read this article by Robert B. Fitzpatrick: Although published in 2003, it serves as a good starting point in the event your efforts to prevent employment issues are not completely successful.

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