BlogProtecting Your Small Business—Hiring People

September 13, 2021by Robert M. Bovarnick
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According to the Small Business Administration, there are over 30 million small businesses in the United States. That is a staggering 99.9% of all businesses in the country. If you are one of the people who own a small business and have been successful enough to need to bring on other people, you need to make sure you take steps to protect your business. Here are 4 tips on how to protect yourself and your business. As you know, laws vary from state to state, so it is important that you speak with your attorney to make sure you are complying with the laws in your state.

  1. Employee vs. Independent Contractor. The first decision you will need to make is whether the person or people you bring on will be employees or independent contractors. There may be tax or other reasons to go one route over the other. You should speak with your accountant and attorney to figure out which way is better. Keep in mind that calling someone an independent contractor may not be enough to make them one. Depending on a number of factors, they may be considered an employee. They are: control; opportunity for profit and loss; investment in equipment and materials; special skill; permanency and duration; and integral part of the business.
  2. Contract or no contract. Most people who are hired do not have a written contract. They are known as an “employee at will.” They can be fired at any time for any reason (so long as it is not discriminatory or violates some other law). The advantage to a contract is it gives both sides a clear road map as to the responsibilities, as well as certain things that are only enforceable if they are in writing.
  3. Confidentiality Agreement. There is a good likelihood that you will be providing your hire with confidential information. That information could be among the most valuable information you will provide. The last thing you want is for the hire to walk away and start using that information for their benefit, which would be harmful to your business. You can protect yourself with a confidentiality agreement.
  4. Non-competition / Non-solicitation Agreements. If you hire people, you are going to want to make sure they don’t walk away with important aspects of your business, such as your clients or other employees. If allowed by the laws of your state, one way to protect your business is to have them sign an agreement that, if they leave, they won’t compete against you or take your best employees with them. It doesn’t matter whether they are an employee or an independent contractor, having them agree to what they will and won’t do is crucial. These agreements are called non-competition and non-solicitation.

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by Robert M. Bovarnick

Rob Bovarnick is a graduate of the University of Miami School of Law. Prior to starting his firm, he was Vice Chair of the Bankruptcy Group at a 170 lawyer firm and head of the Creditor’s Rights practice at a 20 lawyer firm. He is the former Chair of the Eastern District of Pennsylvania Bankruptcy Conference.

Bovarnick and Associates, LLC

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