Three Legal Tips to Protect Your Business this Spring

It’s officially Spring in Charlotte—has your business done a little Spring housekeeping yet?  Business owners should take the time at least once per year to look over their core policies and documents to make sure they are effectively protecting their business.  From employment agreements to social media policies, here are three tips you can use today for your company’s legal Spring cleaning. 

Insist on an Employment Agreement for Everyone

After hiring a new employee, every business owner hopes the person will turn out to be Mr. or Mrs. Right.  But sadly, that’s not always the case.  Make it a point to review any dusty or outdated agreements now, because a well-drafted employment contract protects you from employees who might do harm to your business in the future.  At a minimum, every employment agreement should include a description of the new-hire’s expected duties, their compensation, the required time commitment for the position, and some termination terms.  

In addition to these clauses, several other additions will go a long way towards protecting your business.  A carefully drafted non-compete agreement can prevent your employees from leaving the company, stealing your clients, and starting their own competing business.  Likewise, non-disclosure and confidentiality clauses can make sure a departing employee stays tight-lipped about the company’s private information.  

Properly Classify Workers as Employees or Independent Contractors

You’ve made sure your employment agreement is perfectly drafted and every worker has happily signed on the dotted line—congratulations!  But before you celebrate with some Spring libations from NoDa Brewery, have you considered whether your workers are employees or independent contractors?  Understanding the difference between these classifications can save you thousands in IRS penalties and back-taxes.

The IRS typically looks at several factors when figuring out whether a worker is an employee, requiring the employer to withhold and pay taxes, or an independent contractor, requiring the worker to withhold and pay his own taxes.  If your business controls every aspect of how your workers complete their job, you probably have an employee.  If your workers are required to provide all their own equipment and cover their own business expenses, then it’s likely that you have an independent contractor.   

If you’re on the fence about how to classify your workers, you can always reach out to the IRS directly.  The revenue agency will typically give you an opinion on the matter after you file the right forms.  Making sure all workers at your business are properly categorized will keep the IRS off your back and ensure that your company is fully protected as Spring turns into Summer.  

Institute a Social Media Policy

Let’s face it:  social media is wildly popular, and people are talking about your company online whether you like it or not.  If your business has an online presence, you should definitely have a social media policy that lets your employees know what you expect when they communicate to the outside world through social media.

Some employees think that they have a right to say whatever they want online, even if what they say harms your business.  While it’s true that the freedom of speech is alive and well in the United States, just because your employees have the right to say something doesn’t mean there aren’t any consequences for saying it.  A good social media policy makes your employees take responsibility for what they write, and it encourages them to use common sense when expressing themselves. 

When drafting your business’ policy, you should consider including requirements that your employees steer away from comments involving slurs, demeaning language, and other types of disparaging remarks.  Your policy should also make sure employees respect copyrights and protect your company’s confidential and proprietary information.  Without giving specifically defined boundaries to social media use, you may find that your star employee spilled the beans on Twitter about your company’s secret recipe for pasta primavera (primavera means “Spring” if you missed the pun).  

Now that Spring has sprung, take these three tips and use them to improve your business today.  Don’t let another year go by without sprucing up your company’s policies and contracts!