The top three documents that your new employee should sign

What you’ll discover:

What legal paperwork should I have ready for my new employees to sign?
What is the difference between an employment contract and an agreement with an independent contractor?
What exactly is a nondisclosure agreement?
Is an Employee Handbook required?

Selecting the appropriate individuals to recruit is one of the most challenging challenges for any small company owner, but effectively onboarding your new employee is critical to a fruitful partnership. Although the specifics of this procedure can vary depending on your company’s requirements, having new workers review and sign key contracts will assist ensure that both sides are on the same page while also safeguarding your business.

What legal paperwork should I have ready for my new employees to sign?

We’ll go through three of the most critical papers you should have your new employee sign:

Employment Agreement (or Independent Contractor Agreement, depending on their classification)
Employee Handbook on Non-Disclosure Agreements

What is the difference between an employment contract and an agreement with an independent contractor?

When making a hiring choice, think about whether you’re recruiting an employee or an independent contractor, since the legal and tax ramifications may vary. Improperly identifying an employee as an independent contractor might get you in hot water, so pick cautiously and consult with a lawyer if you’re unsure.

Consultants, freelancers, and those who operate independently are examples of independent contractors. They may work from home and often work for more than one customer while choosing their own hours. Unlike workers, they are compensated for their services without any taxes being deducted, they pay for their own work-related expenditures, and they are not covered by state or federal employment regulations. Whenever you hire an independent contractor, you should ask them to sign an Independent Contractor Agreement. This contract will specify the sort of job they will do, when it is due, and the rate of compensation.

When you hire an employee, you have much greater control over their work output and hours, even though they typically—but not always—work outside of your company’s premises. You must reimburse any reasonable expenditures linked with their day-to-day duties and follow all relevant employment rules. You may also give benefits to workers that independent contractors do not have. Many firms require new hires to sign an Employment Contract. Although not needed by law, this allows you the chance to define out the terms of the employment relationship, termination rules, benefit information, and other specifics.

What exactly is a nondisclosure agreement?

Passwords, confidential business procedures, and other sensitive data are almost certainly accessible to your staff. A Non-Disclosure Agreement (NDA) may help you protect your assets whether you’re recruiting an independent contractor or an employee. NDAs are legally binding contracts that guarantee secrecy between two parties: the owner and the receiver of specific information.

The NDA will specify what information is deemed secret, such as client lists, customer data, business insights, technical data, sales techniques, or anything else that isn’t public knowledge or otherwise excluded. Remember that the scope and enforceability of an NDA may differ depending on state legislation. Most states, for example, will not recognize NDAs that are overly broad or vague.

Is an Employee Handbook required?

The Employee Handbook is an excellent approach to convey extensive information about employee expectations, corporate culture and purpose, standards of behavior, administrative procedures, and any other regulations you want your new workers to be aware of. It’s intended to both welcome new staff and get everyone on the same page, putting them “on notice” that they understand what’s expected of them.

An Employee Handbook may restate some of the same provisions mentioned in the Employment Contract, but it usually goes into more depth and includes instances of unacceptable conduct. Obtaining a new employee’s signature next to a declaration stating they have received and understood the handbook provides you with stronger legal defenses in the event that you must reprimand or fire the employee.