Building a BusinessMichigan, like many states, seeks to create a vibrant start-up environment. And as a further sign of that commitment, February 18 through February 25, 2015 marks Entrepreneurship Week in Michigan under a recent proclamation from Gov. Snyder.

The preamble for the Governor’s proclamation notes that:

More than 70 percent of young Americans envision starting a business or doing something entrepreneurial as adults…Entrepreneurship is critical to success in the workplace and in communities as it brings ideas, creativity and innovation to life and drives economic growth on local, state and national levels … Entrepreneurship encourages job creation and is a vital part of Michigan’s reinvention and continued growth.

While the pomp and circumstance surrounding a whole week dedicated to entrepreneurship is nice, it is critical to also focus on an issue that every boot-strapping entrepreneur needs to address as they grow their business – employees.

Certainly business startups will face any number of hurdles in starting their business. But employee issues often top the list. In this regard, most start-ups encounter problems if they fail to have the right employment documents ready to be signed by newly hired employees. The following employment documents should be in every new company’s HR toolbox:

  • Employee Offer Letters and Employment Agreements – Every start-up should have a standard offer letter to be signed by new employees. Among the topics to include in the offer letter will be the terms and conditions of the position; noting whether it is “at-will,” meaning the employee or employer may terminate the employment relationship for any reason or no no reason at all (assuming the reason is not for unlawful discriminatory reasons or other reasons that violate applicable law), and the start-date. Another provision employers should consider including is asking the employee to sign and return an acknowledgment that the employee is able to accept the position without violating any obligations to prior employers, e.g., noncompete restrictions.
  • Intellectual Property or Inventions Assignment Agreement – Such agreements provide that any inventions, ideas, products, or services developed by the employee during the term of employment and related to the business belong to the company and not the employee.
  • Employee Manuals – Employers should consider employee manuals as roadmaps for how your company operates. A few common examples of items that should be covered in an employee manual include anti-harrasment and discrimination policies, how to report such issues and other employee misconduct, company policies on vacation, employee social media policies, and computer and internet usage policies.

A word of caution; It may be tempting to try and save a few dollars by “borrowing” the above HR documents from a former employer or scouring the Internet for free forms. But such penny pinching can also leave your business unprotected. Consider for example a recent post about a company that had won at the trial level in a Family Medical Leave Act lawsuit, but that decision was reversed on appeal because of a mistaken representation made in the company’s employee manual. Such mistakes also frequently happen when it comes to improperly or incomplete noncompete agreements.

Noncompete and confidentiality agreements are also an area where entrepreneurs often get their companies into trouble by not having such documents drafted specific to their needs. See DIY Employment and Noncompete Agreements: Are You Getting What you Pay For? In sum, if you are investing your time, money, and other resources into starting a business, then you should also plan on protecting that investment with appropriate employment documents and other legal protections.

For more information about employee manuals, employee contracts, noncompete agreements and other employment related documents, contact attorney Jason Shinn.