Many business owners don’t realize this but the classification of your workers is very important. It will impact your tax obligations, who owns their work product, and more.
This is Part 4 (Other Considerations) of a four part series on hiring employees and contractors. You can learn more in Part 1 (The Differences), Part 2 (Tax Responsibilities), and Part 3 (Intellectual Property Issues).
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Regardless if you hire employees or independent contractors, you should consider a few additional legal protections:
You should always use written agreements with your independent contractors. You can also use them with employees, but they are not as important there. But if you don’t use them, you should at least have an employee handbook (or something similar) which they sign to protect you in certain areas (see the next few points).
It is always wise to use non-disclosure agreements with your employees and contractors. The NDA should require them to protect your confidential information and prohibit them from disclosing or using your information without your consent.
You might have your employees and contractors sign a non- solicitation to prevent them from soliciting your employees and clients while they work for you and for a period of time after they stop working for you.
You might have your employees (and maybe contractors) sign a non-compete to prevent them from competing with your business while they work for you and for a period of time after they stop working for you.
*This article is very general in nature and does not constitute legal advice.