Employee Contracts Should be Reviewed Annually

Tom owns an insurance agency and has been getting all of his employees to sign the same employment agreement for years. He asked that I review it to make sure it’s still good.

One of the first things I noticed was that the agreement laid out all of the reasons that an employee can be terminated.

To Tom, this did not seem problematic, because from his point of view, the agreement was listing which actions were unacceptable.

But the problem with that is that it unintentionally increased his risk of being sued. The employment-at-will doctrine says that an employee can be fired for any reason, except an illegal reason. The agreement transformed the at-will relationship into one that can only be terminated for cause.

When was the last time you updated your employee contracts? If you have to dust them off, it’s time to give me a call.