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Common Contracts Texas Businesses use for Employees and Contractors

Common Contracts Texas Businesses use for Employees and Contractors
Hendershot, Cowart & Hisey, P.C.

There are an array of contracts and legally binding agreements that are commonly used to protect a variety of business relationships, confidential information and trade secrets. Companies who rely on such documents experience greater confidence and stability in the course of everyday business, with contractors and when employees come and go. In Texas, these types of contracts (or agreements) businesses commonly may use can include employment agreements, non-compete agreements, confidentiality agreements, independent contractor agreements and work-for-hire agreements.

Common Contracts Texas Businesses Use - Explained:

Employment Agreements: This formal agreement specifies the obligations and expectations of an employer/employee relationship. A standard contract can be created for all employees and customized for specific jobs. Common elements to consider in an employment agreement include:

  • The specific job position offered and accepted, including job title
  • Duties of the employee and role of the employer
  • Wages and compensation
  • Benefits
  • Procedures for termination
  • The duration of employment, or an “at will” clause stating that the employment term is open-ended
  • Restrictive covenants or a noncompete or non-disclosure agreement

Non-Compete Agreements: It is not uncommon for an Employee Agreement to include a Non-Compete Clause (covenant not to compete) or separate Non-Compete agreement for executives, employees or other owners or partners alike. The signing party agrees that, if terminated or otherwise removed, not to engage in a similar trade or profession, for a reasonable specified period of time and geographic area, that would compete with the employer. Some of the reasons a company would use a Non-Compete Agreement are:

  • Protection against former employees using trade secrets in a competitive enterprise
  • Prevent poaching or solicitation of clients and customers
  • Protect integrity of current products in development
  • Safeguard public relations
  • Maintain privacy of company operations and structure

Confidentiality Agreements: Commonly referred to as an NDA(Non-Disclosure Agreement), this type of contract is a promise to maintain secrecy of the items specified within the contract. The terms are effective for the duration of employment and a specified period of time after the employment relationship ends. Here are a few circumstances when a company would want to implement an NDA:

  • Prospective upper management interviews that will include discussion of confidential company information
  • Business relationship with a consultant or contractor engaged in a temporary project
  • Vendor or contractor relationship that is privy to proprietary information
  • Stockholder and shareholder with a right to confidential company information

NDAs make it possible for companies to protect the security of information that is critical to business success. It prevents proprietary information from falling into the hands of competitors. It also helps prevent disgruntled former employees from exploiting confidential information for retaliatory purposes.

Independent Contractor Agreements: A written contract between two parties for a specific service or project. One person or company hires another to help on a short-term project or job or occasionally on a project to project basis. Unlike an employment agreement, an Independent Contractor Agreement clearly explains why the party hired is an independent contractor in lieu of an employee for legal and tax purposes. Elements of an independent contract agreement may include:

  • Payment details and dates
  • Duration or period of the contract
  • Details of the parties to the contract, including any sub-contracting arrangements
  • A description of the goods and/or services that your business will receive or provide, including key deliverables
  • Key dates and milestones
  • Termination conditions and any other special conditions
  • Definitions of key terms used within the contract
  • Required insurance and indemnity provisions
  • Renegotiation or renewal options
  • Dispute resolution process

Work-For-Hire Agreements: Commonly used by independent contractors, a Work-For-Hire Agreement (WFH) is a contract that defines the scope of a project and the expectations to be fulfilled by both parties. With a work-for-hire agreement, all of the attributes of copyright ownership, typically including credit and control, vest in the hiring party, not the creator. Situations in which a WFH can exist include work created by an independent contractor OR work prepared by an employee, within the scope of his or her employment. A WFH agreement usually includes details such as:

  • Project timeline
  • Work schedule
  • Milestone schedule
  • Terms of compensation

Drafting and Enforcing your Business Contracts and Agreements

Carefully considered and well-written contracts offer many benefits and protections for employers and employees. If you wish to discuss a potential business agreement or enforcement of a business contract, a breach of contract case, or another related intellectual property law matter, contact our legal team at Hendershot, Cowart & Hisey, P.C.

As industry leaders who counsel businesses of all types and sizes, our Houston business attorneys have extensive experience helping clients draft, protect, enforce and defend their business agreements, intellectual property and trade secrets. Call (713) 909-7323 or contact us online to schedule a consultation.