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How can employment contracts benefit your business?

by | Jun 9, 2022 | Business Law

Requiring employment contracts for your workers in California can serve a dual purpose. A well-written contract can disclose your expectations and provide clarity for your workers. It can also be a way for you to preserve and protect sensitive aspects of your business.

Once you have an employment contract, periodic updates can preserve its function. Customizing contracts to accommodate specific roles can keep the information applicable for every one of your workers.

Address expectations

Perhaps the most obvious reason for having an employment contract is for you to disclose your expectations for your workers. You can discuss desired outputs and your requirements for achieving results. You can also address disciplinary measures for employees who fail to comply with your rules and regulations.

Equally as important, you can give a description of what your employees can expect from you. This includes information about pay structure, benefits, overtime wages, PTO and employee-sponsored retirement benefits among other things.

Protect against lawsuits

According to, another benefit of employment contracts is that you can protect your business against lawsuits. If you do not have a formal agreement in place regarding the relationship between your company and its employees, misunderstandings and disputes may threaten your organization’s sustainability and success. Without proof of an agreement, a disgruntled employee may claim one thing when something entirely different happened. Proving what really happened without evidence of an agreement can be a very difficult task.

If a former employee does take you to court, you can use an employment contract as leverage. You can describe the progression of events while showing that the individual did indeed sign an agreement. Including all critical aspects of a worker’s job in a contract can minimize the chances of losing a lawsuit.