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Crafting Ironclad Employment Contracts: Legal Essentials for Employers

Most employment in Nevada is “at-will,” meaning either the employee or employer can end the relationship at any time without providing notice or cause. That said, many Nevada businesses find it helpful to enter into employment contracts with their key employees. Indeed, a well-drafted employment contract can establish what is expected of each side and minimize any potential legal disputes down the road.

But before a current or potential employer asks you to sign a contract, you should first read through the document and make sure that you understand all of the relevant language. It is also a good idea to consult with an experienced Las Vegas employment law attorney who can not only review the contract but also represent you in negotiations with the employer over the key terms. Remember, a contract is supposed to be a “meeting of the minds.” And when it comes to something as critical to your financial security as employment, you should be proactive when it comes to asserting your legal rights.

What Makes a Good Employment Contract?

The first thing to keep in mind about an employment contract is that it must be specifically tailored to the underlying legal and technical framework of the business. In other words, you never want to pull a boilerplate employment contract off the Internet and ask an employee to sign it. Employment contracts are governed by state law, so any agreement must be tailored to comply with Nevada’s specific rules and requirements. Furthermore, a contract may need to contain technical terms or “jargon” specific to the employer’s industry, in which case the contract should be careful to define any such terminology to avoid confusion.

This is, in fact, the prime directive when it comes to crafting an employment contract: Be clear and concise. The contract should be structured in a logical and easily read format that minimizes the use of language that is not fully understood by either party. The contract should also be tailored to the specific requirements of the employee’s job.

In terms of what an employment contract should cover, some of the more common items include:

  • the employee’s job title and specific duties;
  • the terms of the employee’s compensation, including their base pay, commissions, bonuses, stock options, and fringe benefits;
  • if the contract provides for accrued leave or vacation time, what will become of any unused time at the end of the year or upon the end of the employment relationship;
  • the length of the employment period, i.e., whether it is “at-will” for a specific length of time;
  • whether either party has the right to terminate the agreement, and if so whether they must give a reason;
  • the amount of notice either party must give when terminating the agreement;
  • whether the employee is entitled to any severance pay in the event of early termination;
  • the process for amending or revising the agreement; and
  • provisions governing what to do in the event of a breach.

In addition to these terms, many Nevada employment contracts will also include non-compete and confidentiality clauses. A confidentiality agreement typically requires the employee not to disclose any of the employer’s confidential or proprietary business information (i.e., trade secrets) even after the employee no longer works for the company. A non-compete clause restricts the employee’s ability to work for a competing company in the same industry and geographic area for a specified period after the employment relationship ends.

Non-compete clauses are often quite controversial. They are legal and enforceable in Nevada, provided they meet certain conditions specified in state law. A judge can “revise” portions of a non-compete clause that are found to be overbroad in their restrictions. For example, a non-compete that permanently bars the employee from working for a competitor might be revised to just 1 or 2 years.

Speak to an Attorney Before Signing on the Dotted Line

An employment contract should never be treated as a “take it or leave it” affair. As the employee, you have the right to negotiate the terms of your employment. This includes taking care to ensure that the final contract is clear, does not contain overly restrictive covenants, and complies with all applicable federal and state laws.

Ace Law Group can assist you with both negotiating and enforcing an employment contract. Call us today at 702-333-4223 or contact us online to schedule a free initial consultation.