By Douglas B. Large, Partner
November 2013
Most employers have an employee handbook, which is designed to explain employment policies to its employees. However, few employers have taken the next step to ensure they have the following three, stand-alone documents which can be invaluable to their business.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1]
ALTERNATIVE DISPUTE RESOLUTION (“ADR”) AGREEMENT
Requiring employees to resolve their employment disputes through mediation or arbitration is a matter of contract. Consequently, without an enforceable ADR agreement, more costly litigation is where you will be headed to deal with such disputes. Although there are some downsides to ADR (which you should discuss with counsel), generally, most employment disputes can and should be resolved through either mediation or binding arbitration.
Accordingly, I frequently recommend that my clients seriously consider a stand-alone ADR agreement to more efficiently and effectively conclude disputes outside of court. Such a resolution is usually faster and less expensive. In addition, as I informed you in the August BFAS Advisor, ADR agreements may effectively avoid the threat of class-action litigation (See, American Express v. Italian Colors Restaurant). Since an enforceable ADR agreement waives each party’s constitutional right to trial by jury, it is critical that such an agreement be knowing and consensual. These important requirements are best guaranteed if your employee is required to read and sign a stand-alone agreement. In other words, it is not recommended that an ADR agreement be one of the many policies and/or provisions in a lengthy employee handbook.
NON-DISCLOSURE OF INTELLECTUAL PROPERTY AGREEMENT
Most businesses exist because of, or at least possess, some proprietary and/or confidential information they would not want disclosed to their competitors. Add to this reality (1) the benefit of ensuring that all intellectual property developed by your employees is expressly assigned to you, the employer, and (2) the rampant use by most employees of social media for networking and other purposes (and through which proprietary information can easily be dispersed), and the need for a confidentiality agreement becomes obvious to all.
While many employers have some form of agreement designed to protect their trade secrets, most such agreements I have reviewed are inadequate to provide maximum protection in today’s electronic world. Given the widespread use of transportable electronic devices and social networking, your existing non-disclosure or confidentiality agreements probably need to be updated to ensure you have employed all protections available under law and needed in today’s environment.
POLICY FOR THE DESTRUCTION AND RETENTION OF BUSINESS RECORDS
If managing paper documents was not enough, employers today also must deal with massive amounts of electronically stored information (ESI). This recommended policy is really two in one: First, it needs to establish how your business is going to systematically destroy outdated and/or unnecessary documents and ESI. Such a policy is critical to both reduce storage costs and minimize legal risks, which are particularly associated with a longstanding retention of ESI. An established and reasonable automated document destruction policy can provide your business with a “defensible deletion” argument and the avoidance of potential court sanctions.
Second, the policy must define and regulate the obligation to preserve both paper documents and ESI. This policy is necessary to ensure you can avoid court punishment for the destruction or deletion of information which may become relevant to litigation or audits/investigations. Your policy must make clear that whenever your business reasonably anticipates a dispute that can result in litigation or a governmental investigation, it must preserve, or place a litigation hold, on all such information, both paper and electronic.
Having these valuable documents/agreements in place will do much to protect your business. They should also help you sleep at night.
Douglas B. Large, Partner
DLarge@BFASLaw.com
(Direct) 805.966.7757
This Advisor is one of a series of business, real estate, employment and tax advisories prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution of this Advisor.
[1] While some employers include the subject(s) of one or more of these recommended documents within their employee handbook, having separate, stand-alone documents is preferable, and in some cases, essential.
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