Most organizations with employees on their payroll negotiate contracts during the initial onboarding process. Workers agree to a specific role with a unique title and a compensation arrangement. Employers often work in certain restrictions on employee conduct, including prohibitions on certain forms of social media use or talking to the news media.
The terms of a contract help clarify what the company expects from the worker and what the business intends to provide in return for the services the worker offers. Often, companies expect that their contracts continue to protect them indefinitely for as long as the worker remains in the same position at the company.
However, changes in employment regulations may force businesses to revisit contracts with workers even if they don’t receive promotions. A few significant changes in federal law might make employment contract negotiations and updates a smart move.
What rules have changed?
There have actually been several significant shifts in employment regulations in the last few years. The federal government recently clarified rules about whether workers are independent contractors or employees.
There has also been a significant, two-stage increase in the minimum salary a worker must earn to be exempt from overtime pay requirements. There has even been a change in the types of restrictive covenants that employers can include in their contracts or enforce in civil court. Businesses may find that contracts that previously protected their interests now leave them exposed in surprising ways.
New contracts can be a savvy business move
The decision to negotiate new business contracts can help companies reduce employee-related exposure. Contract negotiations can also be a great time to identify problem workers and top performers. The company can then offer incentives for improvement or the continuation of above-average work performance.
There are challenges involved in renegotiating with existing workers. For example, the job offer was originally the valuable consideration the worker received for making certain concessions. The company may need to find something to offer the worker to ensure the new contract is valid and enforceable.
Occasionally reviewing employment contracts is a smart move, but adjustments may be downright necessary after laws shift. As such, tracking changes to federal employment laws can help companies recognize when new agreements might be beneficial.