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Essential Documents for Hiring Employees

Hiring employees is a key step for a growing business, but it can be a complicated and time-consuming process. Aside from the obvious challenges of attracting talented candidates and assessing applicants, hiring also requires internal decisions on how to fit new employees into your company’s structure and raises questions about how to protect intellectual property. In addition, there are numerous rules and regulations around hiring and incentivizing employees that businesses must follow.

It’s a lot for any business owner or executive to navigate, and that makes legal counsel a real asset when hiring. From addressing challenges to maintaining compliance with local, state, and federal laws, an attorney can streamline the process of growing your team. Here, we’ve outlined some of the main areas where legal assistance can provide an advantage for your business throughout the employee onboarding process.

Offer Letters: Setting Expectations

Offer letters are the first step in onboarding any new hire. Ideally, offer letters should go beyond the basics of compensation and equity participation and describe the role’s responsibilities, expectations, and include any other information necessary to satisfy employee verification requirements. An attorney can guide you through all the applicable regulations and help you maintain transparency with new hires. That way there are no surprises once a new member joins your team.

Employment Agreements: Outlining Rights and Obligations

Whether you rely on the default provisions of your locality or state or you draft your own, employment agreements are another important consideration when building your team. Some states have “at-will” employment provisions and others do not, so it’s important to understand what regulations apply whether or not you decide to create your own employment agreement.

These agreements are also a good place to include blanket non-compete, non-disclosure, or non-solicitation provisions, which will secure your business’s opportunities and ensure smoother diligence reviews by potential investors and lenders. An attorney can help you understand the relevant state and local laws, outline your rights and those of your new hires, and draft documents that work for your business’s needs.

Employee Manuals: Creating a Successful Workplace

A well-articulated employee manual is essential for every business. The employee manual sets down rules for a safe and efficient workplace, and many state and regulatory agencies require that businesses have one in place.

These days, larger companies expect their vendors to have one too, and often make manuals a requirement in their service agreements. By creating a clear set of expectations that your workforce can easily refer to, you can also minimize costly employee grievances and turnover.

The employee manual will help shape your workplace environment, so it should be well thought-out and comprehensive. By working with legal counsel, you’ll gain expert perspective about what topics to address and what regulatory obligations you need to fulfill with your manual. With a strong manual in place, you’ll have clear standards for your workplace and policies ready to handle potential issues.

Stock Option Grants: Incentivizing Strong Performance

Stock option grants allow an employee to own shares of your company, often at a reduced price, at a future date or after certain requirements have been met. Stock grants can be an effective way of incentivizing employees and other stakeholders, but there are many variables to consider when structuring them—qualified versus non-qualified grants, waiting periods, vesting schedules, and more. In addition, the choices you make when drafting these grants will have major taxation, fundraising, ownership, and regulatory implications for your company and the grantee.

Legal counsel can offer insight on best practices, outline the ramifications of various grant structures, and help you draft grants that meet your business’s specific needs and provide an attractive incentive to your employees.

Independent Contracting Agreements: Securing Key Services

An independent contractor agreement allows someone to perform work or services for your business without you hiring them as an employee. It’s an important distinction to make because independent contractors are responsible for paying their own Medicare and Social Security taxes, and an independent contracting agreement goes a long way toward ensuring that contractors won’t be misclassified as employees—placing the tax burden–and potential fines–on your company instead. In addition, these agreements cover provisions such as the contractor’s time and place obligations, compensation, and expense reimbursements.

The rise of the gig economy has led to increased scrutiny around independent contracting, and new laws, such as AB5 in California, have set stricter limits around how these arrangements can be utilized.

SETH KAPLOWITZ
Seth has over 20 years of experience, as an attorney practicing at international law firms and as in-house counsel to an international private equity firm. Seth has advised on, structured and executed commercial transactions throughout North America, Europe, Asia, Africa and South America, both as a legal practitioner as well as an equity and debt holder.
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seth@kaplowitzfirm.com
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