Compliant employment contracts create a foundation for mutually beneficial relationships between employers and employees, while at the same time providing safety against any lawsuits that could arise due to non-compliance. It is better to err on the side of caution by consulting a Texas corporate attorney to help safeguard your business when writing up employment contracts.
Understanding Employment Law Basics in Texas
Employment laws in Texas at its basis is employment-at-will. This term implies that the termination of an employee can happen for no reason, without any advance notice, by the employer. Likewise, the employee can terminate the job without prior notice to the employer and not be faced with legal implications.
According to the Texas Guidebook for Employers, other than statutes and some express agreements, the only significant exemption that exists against the employment-at-will doctrine, is terminating an employee who refuses to commit a criminal act requested by the employer. In addition, Texas contracts are influenced by other statutes geared at protecting workers’ rights. Among these are:
- Texas Payday Law: Regular paydays should be established by employers that comply with the terms of the contract concerning the payment of wages.
- Texas Labor Code Chapter 21 (Texas Commission on Human Rights Act): Closely aligning with the Civil Rights Act and the Americans with Disabilities Act, this law prohibits employment discrimination based on race, color, disability, religion, sex, nationality, or age.
- Texas Whistleblower Act: Protection is granted to employees who make good-faith reports of violations of the law by their employer to an appropriate law enforcement agency.
When drafting employment agreements, employers must be aware of these laws carefully to ensure compliance with Texas statutes.
Key Components of an Employment Contract in Texas
When creating a compliant employment contract in Texas, employers should ensure that several key components that cover the interests of both the employer and employee are present. Some crucial elements needing to be featured in employment contracts in Texas include:
- The parties involved: This should be identified by using full legal names.
- The position and duties: Specific job titles, and detailed description of the responsibilities and duties of the employees.
- Compensation and benefits: The employee salary or wage to include the frequency and methods of payments. Will there be any benefits such as paid time off, retirement plans, etc?
- Employment duration: Is the employment at will or within a fixed term? The contract should specify the start and end dates.
- Confidentiality clauses: It should include any non-disclosure agreements to protect proprietary information and any trade secrets.
- Non-compete clauses (subject to certain new limitations): These restrictions are in place to prevent the employee from engaging in similar employment within certain geographic locations for some time even after leaving the company.
- Probationary Period: Any initial period during which the employee is under evaluation and the conditions associated with this period.
- Termination conditions: Under what conditions can the employment be terminated? These should be clearly defined including any notice requirements and arrangements for severance pay.
- Dispute resolution: Methods for resolving any disputes that arise, such as arbitration or mediation.
Other elements can also be included based on the nature of the contract. To guarantee employment contracts are compliant, the employer should understand local and federal employment laws to reduce the legal risks and help create a positive work environment.
Common Mistakes to Avoid When Drafting Employment Contracts
While it is important to remember the key elements when drafting employment contracts, it is sometimes easy to encounter common pitfalls that can potentially lead to legal complications. The following are some mistakes to avoid when drafting agreements:
- Vague terms and conditions
- Absence of laws
- Absence of non-compete and confidentiality agreements
- Unclear definitions of the employment relationship
- Failure to mention State-specific rights
- Lack of provisions for regular updating of the contract
- Waiving at-will employment
These common mistakes can save you from potential legal problems.
Have More Questions? Reach Out to a Texas Corporate Attorney Today
While there may be many resources to help when drafting compliant employment contracts for your business, always consider consulting with a legal professional. Contact us today for a consultation.
This is not intended to be legal advice. Please consult an attorney.