What agreements should I have with my employees?

You will likely want to either have an offer letter or employment agreement and a Confidential Information and Invention Assignment Agreement (CIIAA) with each employee. An employee offer letter is used with most rank-and-file employees. In contrast, an employment agreement is occasionally used with a more limited set of key employees.

Every business has different needs when it hires a new employee. But regardless of company size or industry, it is always a good idea to present new hires with an offer letter that outlines some of the critical terms of the employment relationship to set initial expectations, introduce your culture, and minimize future legal risk. Most offer letters will include:

• a welcome to the potential new hire, specifying the title of the position offered, the name of the person to whom the position reports and their anticipated primary duties;
• compensation details (specified as salary or hourly wage along with the frequency of payment);
• an explanation that employment relationships with the company are “at will” and what that means;
• an explanation that the company requires all employees, as a condition of employment and continued employment, to sign a CIIAA;
• information about how long they have to accept the offer and a contact name in case they have any questions; and
• below the company signature on the letter, an acknowledgment that the person has to sign to show their acceptance of the offer.

Employment agreements will amplify the topics covered in an offer letter and may discuss bonus potential, severance, equity grants, etc.

Note that many U.S. states provide significant protections for employees and certain contract provisions (like a covenant not to compete following employment) may not be enforceable and may even invalidate other portions of the agreement. If you expect to have significant employees in U.S. states, you should seek competent advice regarding labor and employment laws.