What Every Business Owner Should Know About the Termination of Employees

Unfortunately, employee termination is often a necessary part of running a successful business. Recent statistics show that the federal government collected $350,000,000.00 in fines in one calendar year for employment law violations and that the average settlement payment to a disgruntled employee in a wrongful termination suit was $25,000.00.
Business owners should familiarize themselves with the applicable laws and consult an attorney prior to any employee termination. This will reduce exposure to time consuming and costly litigation and allow business owners to continue doing what they do best: running and managing their business.

Generally, employees without an employment contract are considered at will. Employees at will can be fired by an employer at any time, for any reason or for no reason at all with no resulting liability. Conversely, these “at will” employees are free to end their employment at any time and for any reason.
To prevent subjecting yourself and your business to litigation regarding an employee termination, it is crucial that employers accurately and objectively document each employees performance issue that arises in the course of the employment. Employers should keep a personnel file on every employee and maintain documents concerning employee issues, problems, and discipline.
The failure to property document employee issues, problems, and discipline may subject the owner of a business to unexpected liability.

 

 

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Stuart J. Oberman, Esq. handles a wide range of legal issues for the business community including business transitions, sales, real estate transactions, lease agreements, employment law and entity formation.
For questions or comments regarding this article please call (770) 554-1400 or visit  www.obermanlaw.com
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Should you choose a friend to be your business partner?

Planning to start a business partnership with a friend? Prudence demands looking at the pitfalls – as well as the potential strengths – of such relationships. Here are a few questions to consider.

What will my friend contribute to the business? Does he or she have strengths that will clearly enhance the business – abilities, knowledge, or resources that you don’t possess or aren’t willing to acquire by other means? Say, for example, you are good with customer relations, but not too good with numbers. If your friend loves details and is clever with records, the partnership may make sense. If, on the other hand, your friend really can not offer something that would round out the business or make it more profitable, you might want to consider partnering with someone else.

Are you willing to lose the friendship? This is a tough question, but one that’s critical to consider. After all, you and your friend will be working together, day in and day out, to make the business succeed. Such relationships can bring out the best – and worst – in people. If maintaining your friendship is one of your highest priorities, partnering with someone else may be a better choice.

What’s expected from each partner? Developing a profitable business is hard and often unrewarding work. You and any potential business partner should honestly discuss expected work hours, contributions, and responsibilities. Resentment can creep into any business relationship when partners feel that workloads and rewards aren’t fairly distributed.

Can you communicate effectively? Like a good marriage, a long-term business partnership takes honest communication to succeed. Ask yourself, for example, whether you can handle constructive criticism from your friend/business partner. Even the closest business partners don’t always see eye to eye, so it’s important to take an honest look at how you both handle disagreements. Will you work through difficulties for the firm’s sake, or bury your head in the sand and hope for the best? Answering this question is crucial to the success of your partnership.

Protecting the Value of Your Practice:
 Non-Compete and Trade Secret Agreements

Practice owners are often concerned about how to best protect their patient base when an associate leaves the practice. There are two methods of preventing this type of devastation to a practice, which are: (1) non-compete agreements and (2) trade secret agreements.  Both of these types of agreements should be incorporated into an associate’s employment agreement.
Non-Compete Agreements
A non-compete agreement allows the owner of a practice to limit a former associate from starting his or her own practice as well as prohibit an associate from working for a competitor.  The owner of a practice should always consult with their attorney before entering into any type of non-compete agreement.
Trade Secrets
A trade secrets provision in an associate’s employment contract will also help protect confidential information of a practice.  A trade secrets provision should provide that all patients and their confidential information are trade secrets of the practice, and sanctions will be enforced against any associate or employee who attempts to use this confidential information for their own personal gain.
The owners of a practice must be familiar with non-compete and trade secrets agreements.  All associates should be required to sign a non-compete and a trade secrets agreement at the beginning of their employment.
Without a proper non-compete and trade secrets agreement, either prepared separately or incorporated into an associate’s contract, the owner of a practice has substantial financial risk.