Contracts with Employees 1099 et al.
W-2 Employee Contracts: While not required as Massachusetts is an At Will
state, meaning an employer in Massachusetts may hire or fire without
explanation or cause, there are occasions where an employee will want to
contract with a W-2 Employee. Sometimes when contracting with a W-2
Employee is necessary to establish non-solicitation agreements, non-compete
agreements or other provisions in the contract.
1099/Independent Contractor Agreements: Working with another business
will require a contract. Similarly, working with an individual who is
independently operating another business will require a contract.
Protecting IP/Trade Secrets
Separation Agreements with an employee or contractor or even clauses
addressing the same within an existing contract can be used to protect the
intellectual property, trade secrets, and other property of the business.
Annual Filings
Massachusetts requires annual filings for all domestic corporations; annual
filings are sent to the Secretary of State.
Terminating Employees
Terminating an employee is a critical move for any business owner. How
termination is handled can greatly impact any business as it exposes the
business and potentially the owners of a business to liability.
A very good rule of thumb is to limit all written communication with an
employee to only that which is absolutely necessary prior to beginning or even
considering terminating an employee.
Additionally, it is imperative that a business follow its own termination,
and disciplinary policies and procedures if applicable, during the
termination process.
Separation Agreements
There are times when it makes sense to offer an employee something in
separation. The decision to provide a separation agreement with a settlement
to an employee is partly based on a risk assessment analysis where the cost of
a potential lawsuit is compared with the cost of the settlement itself.
At other times, a separation agreement is not something necessary to consider,
either because the risk of a lawsuit or other liability is low or for some other
reason.
Hiring Employees
New hires to a corporation should be vetted thoroughly not only for their
ability to perform a given job, but also with an eye to any liability they may
bring with them.
It may be beneficial to contract or not contract depending on the type of
employee.
Insurance Issues
Does the insurance company providing your general liability insurance,
malpractice insurance, or other insurance have updated business information?
The answer to this question may make the practical difference between
having coverage and not having coverage.
Business Operating Accounts
An operating account should be kept for every business; separate accounts for
different business lines are also wise.
Spending from the operating account should be limited to business purposes
only; that is, for expenses directly related to the business, payment of wages,
etc.
Failing to utilize an operating account for its intended purpose may be
perceived as commingling funds and form the basis for reaching the
personal accounts of owners in a lawsuit.
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