So, you're ready to make a hire? That's great – but before you do, you should make sure you have a thorough understanding of all the documents you'll need or could need.
To that end, this article will break down some of the common forms, agreements, and letters needed to hire candidates. Let's dive in:
1. The Offer Letter
What is it?: The formal, written job offer extended to a candidate. It typically includes details about the position and the compensation (including benefits) on offer. Signing the offer letter means that a candidate has accepted the job.
Why do you need it?: An offer letter puts everything you and the candidate have discussed in writing. It prevents future confusion over the role or compensation, which could be costly for both the company and the employee.
2. The Non-Compete Agreement
What is it?: Although non-compete agreements are not legal in every state, many companies still ask employees to sign them. A non-compete agreement prevents an employee from competing with the firm for a set amount of time after they have left their job.
Why do you need it?: If you're worried that employees could use your trade secrets to open up competing businesses, it might be a good idea to ask new hires to sign non-compete agreements.
You'll first want to make sure that your non-compete agreement is legal in your state and that it is reasonable (in terms of geography, time, and industries covered). Unreasonable non-competes are often legally unenforceable.
3. The Non-Disclosure Agreement
What is it?: An agreement that prohibits employees from disclosing confidential or proprietary information to people outside the company.
Why do you need it?: If you're trusting an employee with confidential information or trade secrets that your competitors could use against you, a non-disclosure agreement can be a great way to protect your organization.
4. IRS Form W-4
What is it?: The W-4 records important tax information that employers need in order to withhold the correct amounts from employees' paychecks.
Why do you need it?: W-4s are required by the IRS, and you certainly don't want them knocking on your door, do you?
5. Form I-9
What is it?: An I-9 is used to ensure that an employee is legally authorized to work in the U.S. It applies to both citizen and non-citizen hires.
Why do you need it?: It is required by law, and failure to submit it can result in harsh penalties.
6. Benefit Documents
What is it?: This category includes all documents associated with benefits like dental, health care, life insurance, etc.
Why do you need it?: If you're offering an employee benefits as part of their compensation, you'll want to make sure your new hire is able to sign up immediately – and understands everything their benefits cover. This will prevent confusion and potential legal action from employees.
7. The At-Will Agreement
What is it?: Most employees in the United States are considered "at-will" employees, meaning that the employer can terminate the relationship and fire the employee without "good cause." In order to make this crystal clear, some employers will have employees sign at-will agreements that outline the terms of the employer/employee relationship.
Why do you need it?: At-will agreements simply make it clear that an employer can terminate the relationship at any time, which clears up common misconceptions and prevents lawsuits.
8. The Arbitration Agreement
What is it?: An arbitration agreement states that an employee gives up any rights to sue the employer in court and will instead pursue legal claims through arbitration.
Why do you need it?: Arbitration agreements are important mainly because they save employers from costly legal battles against former employees. Arbitration is usually substantially faster and cheaper than going to court. No one wants to face legal action from a current or former employee, but it's good to be prepared!
9. The Non-Solicitation Agreement
What is it?: A non-solicitation agreement states that an employee will not solicit your company's customers or clients for their own company or for a competitor after they have left your organization.
Why do you need it?: Non-solicitation agreements can be especially important if an employee is in a role where customers might be more loyal to them than to the company itself. Having a non-solicitation agreement in place ensures that when the employee leaves your company, they won't bring your customers with them.
This article encompasses the basic documents you'll need while hiring many new employees. However, if your needs are more specialized, you may need some additional paperwork. It's always a good idea to have a lawyer look over your hiring documents, and you may even consider hiring one to craft custom documents for your business.
This article is for informational purposes only and does not constitute legal advice.
Will Zimmerman is a content marketer for Proven.