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hey everybody it's leslie with the new mexico small business development center and i want to introduce everyone to ian alden he's a practicing attorney here in new mexico and he's got a topic today that from what i understand he's going to really get us kind of a deep dive into everything that's going on with this topic understanding employment contracts if you have any questions please type it in the q a or raise your hands and i'll turn it over to you thank you very much and good morning everyone or good afternoon i guess it's good to be with you today for this workshop we're going to be taking a deep dive into employment contracts and what they look like what they should contain some things to keep in mind some things to avoid really diving into the nuts and bolts of these documents before i get started i want to draw your attention to some kobit 19 related resources that are especially useful for small mid-sized business owners who are opening up amidst the continuing copen 19 pandemic it's important to maintain a covet safe workplace for a number of ethical and legal reasons so be sure to avail yourselves of the resources at your disposal have a look at some of these websites and make sure that you're doing everything you reasonably can to have a good covert safe workplace now before we get started just a few reminders your microphone should be muted by default but if it ever turns on for whatever reason please make sure to mute it make sure to set your zoom ratio to fit window that is so that you can see everything on the slides we will be using the q a function to take questions i'm not going to be monitoring the chat window though i believe leslie will be but if you have questions feel free to raise them at any time using the q a function if you have questions that you save till later be sure to write down your question and the slide number it pertains to you can see the slide number in the bottom right hand corner of each slide you can see this one is slide three for example so be sure to write your question down and ask it when you're comfortable coming up in the next few days we've got a few different training sessions and workshops uh we've got one on the 24th how to tell the difference between investors partners and vendors different ways to you know capitalize or finance a company and we've got may 25th a woman owned small business program for federal government contracting also on the 25th uh the most important online stat you cannot ignore and then on the 26th we've got cyber security requirements for government contractors very important topics especially if you're in the area of contracting or soliciting contracts but you know the sbdc has a ton of workshops that are on offer not just these four so be sure to go to their website uh the links at the bottom of this slide you can request no-cost business counseling and loan application assistance and you can see the other workshops and training sessions that are on offer be sure to check back regularly as they keep adding more to the agenda so we're going to start and this is going to be broken down into five basic um groups here but the first is just an introduction to employment agreements and some important contract maxims just rules to live by then we'll jump into some of the basic terms of employment agreements and just think your standard how what where when why and how much [Music] also who might even be a typo but um then we'll move on to confidential information intellectual property restrictive covenants and boilerplate language there's a lot to dive into so let's jump in here again we're going to focus on employment agreements not really dealing with independent contractor agreements which keep in mind they can look very very similar but there's a few key differences with independent contractor agreements that you really want to be aware of we might touch on that in another training session in the future but for now this is going to focus solely on employment agreements for your typical w-2 type employees and just as a reminder before we jump in every employer employee dynamic is unique um every relationship every uh requirement of the employee in terms of what they're going to do every expectation of the employer in terms of what they're going to pay and what support they're going to offer the employee every relationship is different so it's important to make sure that your contract is properly tailored i see this all the time with my clients where they'll find something on the internet and then they'll copy and paste the names in and you'll see terms in there that clearly have nothing to do with the situation at hand and they can actually cause really weird legal problems for the employer especially so just keep in mind that i'm gonna be showing you a lot of sample language from a contract i wrote yesterday i mean this is very current stuff you're gonna see a lot of template contract language for employment agreements but you know it it's important to get your contract refined for your needs whether that's through a good in-house or outsourced human resources um advisor or professional or whether that's through an employment attorney contracts attorney there are a number of different roads to get to a good employment agreement but you should probably take one of them now some good maxims to live by the first one good agreements are made in writing you know i see oral agreements all the time handshake deals a lot of clients especially small business clients they feel comfortable with the people they're working with they have a handshake deal they think you know i've known this person for years or maybe even decades nothing's going to go wrong and then something goes wrong and most contract disputes arise out of ambiguities either in written contracts or oral agreements but oral agreements especially you know it's a lot of he said she said they said they promised this they didn't do this and they said they would and a court's left to shrug their shoulders and figure out okay was there even really a contract here so if you want a good agreement it should be in writing and in that vein contract should provide clear and unambiguous expectations of all parties to the contract the obligations of both parties should be clearly spelled out and to the greatest extent possible limited to what's contained in the contract and what that means is you don't want the contract saying you know providing a lot of employer and employee will figure out what to do later as they may agree upon later i use that language to a degree in contracts to give the parties some flexibility but by and large you want the important bits contained in the document and you want the document to provide that that's the limit of what's expected of the parties you don't want to be creating these secondary contracts verbally or through emails or whatnot after the fact and lastly and this is most important in my opinion this gets to the heart of contracts they should be predictable and enforceable and what that means is both parties should know with some degree of certainty what will happen if they violate the contract or more importantly what will happen if the other party violates the contract if you're an employer and you have an employment agreement with your employee you want to know what happens if the employee is you know runs off with the intellectual property or confidential information or if they violate their non-compete and there's always going to be some degree of uncertainty in enforcing a contract i'll talk about that more when i get to restrictive covenants but to the greatest degree possible you want your contract to provide you with certainty and clarity predictability enforceability it's just important to have these contracts as iron-clad as possible now let's talk about the basic terms that you want in an employment agreement um you know the employment agreements they're fundamentally about the promises that the employee and employer make to each other so an employee is going to promise to do x y and z specific duties and then usually some sort of broad catch-all for additional duties that might be related to their position you don't want an employee turning around and saying well this isn't specifically my employment agreements why should i have to do this you want to have some flexibility in that regard but you know it should be the the contract should include at least the specific duties you know they're going to perform and then conversely the employment agreement should provide for the compensation that the employer will give to the employee and what support the employer will give to the employee because you know it's not just throwing the employee to the wolves and then paying them x number of dollars per pay period i mean sometimes it is if that's your arrangement but typically the employer is going to support the employee through some kind of assistance or training or you know support from other employees etc there should be some kind of support structure built in there so that the employee for one feels confident signing the agreement because the employee might look the agreement and say wow i'm getting a raw deal here and i don't trust that i'm going to fit in but also you know you just want to make sure that the employee feels supported and really is supported to the degree they need to be to do their job properly now at a minimum the contract should provide the following who what where when and why and let's have a look at what that really means so again i drafted an employment agreement yesterday so this is a very current example everything you see here is from that agreement um but this is the basic example of who you see at the top the title of the document is employment agreement um it's entered into between two parties um so and so you know fill in the blank the employer you specify the new mexico limited liability company there's no ambiguity about who or what the employer is and then similarly employee an individual residing in the state of new mexico and identification of the party seems like a really basic thing like why am i even talking about this you'd be shocked at how often i see contracts that fail to accurately identify the parties and when contracts fail to accurately identify the parties there is a better than not chance that they become unenforceable because um it becomes unclear to the court that there was ever a meeting of the minds between two parties to a contract i mean a lot of the times it's enforceable anyway because the parties ratify the contract through doing their respective duties you know even if employee is misidentified if they show up for work and collect a paycheck for three years the agreement is probably going to be enforceable against them but you really want to avoid those problems so clearly identify who in the contract moving on to what again this goes back to the heart of what this agreement should be it should provide what the employee is going to do for the employer and what the employer is going to do for the employee so as we see here um you know and i've abstracted this i took out a lot of the confidential client information so you know abstracted employer is going to engage employee to provide the following services service 1 service 2 i actually had about 30 things in here for services and you can be as narrow specific or broad as you want to be i recommend some specificity but at the end you see here all of the services is maybe required of employee and reasonably related to employees other duties arising here under so that's a protection for employer and employee because you know employer can say well i didn't clearly specify that you have to do this glaringly obvious thing but you need to do this thing because it is so completely related to the other things you're doing that it's again glaringly obvious an employee can turn around and say okay but these other things that have no relation to the other job the other tasks i'm doing are not within the scope of my employment so for example um having a sales person at an auto dealership take on janitorial duties um it's not going to fly under this typically but you know having that sales person um make sure that the cars are left in good clean working order after each showing reasonably related um so it's important to specify the what and then on the other side of it compensation um here's an example of base compensation where the employee's going to be paid a base salary fifty two thousand dollars per year um it's going to be paid on a bi-weekly basis in ance with the employer's standard payroll practices for exempt employees exempt employees in this case being salaried employees who are not eligible for overtime and other things it's part of the flsa guidelines for exempt employees that you don't have to pay them over time typically but um you've got bonus compensation as well which is in this case left of the employer's discretion uh sometimes the bonus is obligatory sometimes it's a commission and you can really get flexible with compensation to a degree as long as you're not running a foul of minimum wage laws or overtime laws for non-exempt employees [Music] and then there's the default all compensation paid to employees should be subject to customer withholding and employment taxes you got to tell the employee that you're taking taxes out in ance with legal requirements and of course that involves them doing their w-4 and claiming deductions or exemptions whatever it is they're going to claim but then you withhold what you're required to then remit it to the irs into the state where and when this doesn't have to be complicated where and when can be as simple as this right here employees will maintain a full-time schedule 45 hours a week and will work from 8 a.m to 5 p.m local time at employers principal place of business this is as abstract and generic as i could possibly make this but it is basically saying you'll be a full-time employee and you will work 8 am to 5 pm local time employers place of business it doesn't even specify the days and that is because a lot of employers are going to be open saturdays or maybe even sundays and you want to have the employee work tuesday through saturday for example this permits that um sometimes if you're just a monday through friday business that would include monday through friday in here just to really lock that down and set the expectation because if you set the expectation in no uncertain terms you're the employee you've got to be here monday through friday 8 a.m to 5 p.m throw on a lunch break typically that lunch break is mentioned in the employer's handbook a separate document but you know if the employee doesn't show up for work during these hours it's a clear breach of contract and it's cause for termination which we'll talk about cause and whether you even need it later but where and when doesn't have to be complicated the why um i i say who what where when and why the why is quite frankly optional in employment agreements i like including it anyway because you know recitals they're not legally binding parts of the contract for the most part they're more an expression of the party's intent before you get into the nitty-gritty legal terms and so if you have recitals in there and then this comes before the court the court can look at the recitals and understand what the intent of the parties was with respect to a contract by default i include them in pretty much all contracts i do not just employment agreements but across the board purchase agreements settlement agreements recitals they're just nice if you get into a contract dispute to avoid the court wrangling over what the parties really intended to do with the agreement it shows a meeting of the minds and it's very it's just handy so this is again a very abstract why like why employer is engaging employee um you know you can really get into some detail with this especially and again to detail a lot with medical providers you know if employer is hiring if they're a medical practice and they're hiring a medical doctor licensed in the state of new mexico to provide certain services especially if they require a specialty licensure certification you put all that in the recitals to make very clear that it's not just employer wants employee but that employer wants a licensed medical doctor to do these jobs and you know they're hiring employees because of those qualifications or because of employees skills maybe they have 20 years or 30 years in the business and if it becomes relevant at some point down the road maybe when it comes to enforcing a non-compete for example these recitals are just nice to have so i try to include the y in all of these contracts now again frequently asked questions how specific do i need to be as specific as possible with respect to the duties you know you need the employee to do but also have that catch-all that's broad enough to create the expectation of flexibility you want and should demand flexibility from the employee to the extent you need it a big question i get can i just leave that blank or decide things later or add things later you can but i really don't recommend it because the point of this agreement is to lock down at least the basic expectations well in advance now as far as termination goes new mexico is an at-will employment state that allows either party typically to terminate the employment relationship at any time without the requirement of advance notice that said employment agreements can create a term of employment like maybe you need them for one year two years or three years or something you create a term of employment and then assuming you don't do it in an underhanded way that lopsidedly disadvantages the employee to the point where it's unconscionable and unenforceable you can kind of circumvent the at-will provisions and require at a minimum that termination of the agreement um requires notice or can result in some damages i mean there are limits to how much you can do that in that will state but you can at least create a notice requirement you can create a requirement the employee take good faith steps to hand off their cases or customers or clients or whatever a transition period you can play with that a little bit with employment agreements but just know that that also to some degree or another will bind the employer to the point where you might not be able to terminate the employee immediately without cause um you might still be able to terminate them with cause but uh for without cop for no cause determination with immediate effect uh you you really want to be careful about how you structure the term of these employment agreements the duration of them and here's an example of termination clauses this is just a basic at will employment agreement termination clause saying that anyone can terminate at any time without advance notice or cause um it still has like an obligation sort of to provide advanced notice like an intent to provide advanced notice it doesn't really mean anything if there's no binding requirement but there is the post termination obligation to um for employer to pay employee with the road through the conclusion of the term of the contract and for the employee to work with employer to hand off anything that they were working on in an orderly fashion that's a contractual obligation and if they don't uphold that there could be damages down the road in a lawsuit for example now getting into some of the i want to say esoteric but the more complicated parts of employment agreements we're going to talk about confidential information and intellectual property because it's really important for employers not to overlook this and to really protect their interests unless you have an employee run off with your confidential information and use it to start a rival business you know in basic terms you've got trade secrets which are you know the sort of catch-all intellectual property that has to do with your processes your methods your you know your business know how an acumen is proprietary and unique to the business in which you take reasonable measures to keep secret so recipes are an example of a trade secret it's a form of intellectual property that restaurants really want to protect when i was much younger than i am now i used to work in restaurants and i'd know um very much how restaurants go to lengths to protect their recipes as trade secrets when you bring on an employee they're bound to learn those trade secrets especially if for example you bring on a line cook they're going to learn your recipes if you bring on a sales person they're going to learn your sales methods they're going to learn your for example your crm processes how you use salesforce how you get leads and generate leads and service leads so a lot of that becomes trade secret and a lot of it doesn't um some of the you know sales processes that are just you know general sales processes you might think well that's a trade secret because it's unique to me but it's not really unique to your business or you don't take reasonable measures to keep it secret so you know trade secrets they're somewhat nebulous and a little hard to pin down but it's still important to protect them especially the more obvious ones again recipes and processes uh are trade secrets you want to protect um similarly employees are likely to have access to your intellectual property you know if you have a website you hire a software designer engineer or web developer they're going to have access to your code base they're going to have access to your underlying materials your marketing materials so that's intellectual property you want to keep secret and keep safe and out of the hands of the general public or competing business you know an important consideration that employers don't really think about when they hire an employee is that those employees are also likely to contribute to the creation of an employer's intellectual property and again software developer contributing to the employer's website content editor creating the website or advertisements or marketing materials mechanical engineers making a new product for manufacture and sale when you hire employees you're expecting a lot of time that they're going to contribute to these end products that you turn around and market and sell and so you want to protect yourself and prevent the employees from running off with your intellectual property or sometimes even worse staking a claim to it you don't want those employees coming back and saying i contributed to this design this product i should be entitled to a commensurate share of all of the profits and revenue derived from it in perpetuity i should be entitled to ownership of this i should be allowed to prevent you from using it in certain ways you don't want employees laying claim to your intellectual property how do you deal with that through the contract your employee agreement your your protection should at a minimum restrict the employee's use of confidential information and require its return when the employee is terminated restrict their access to intellectual property and reassert your ownership over it and lastly i should provide that employee contributions to your intellectual property is what's called work for hire or work made for hire that is it's work being done for you for the employer it's what you're paying them for and so the work because you're paying them for that work for that contribution the you're buying it from them as they make it and so the ultimate intellectual property would belong to you the employer i cannot count how many employment agreements don't include these protections and for some of these employers that is really going to come back to bite them one day so it's important to have them in there here's a basic example of a confidentiality agreement um you know it's i'm including subsection b we really don't have time to dig through this section a full confidentiality section is several pages long i mean it it's quite lengthy but important section a defines confidential information section b as you can see here specifies what the employee can do with it or not do with it it is it asserts the employer's rights with respect to confidential information so your employment agreement should do that it should clearly define confidential information and it should specify you know that employer asserts its rights to it protects it forbids employees from misusing it or taking it with them provides penalties and remedies for the employer if the employee violates this there's a lot that goes into it but your employment agreement should have this and here's an example of work for hire um employee recognizes and understands that their duties and employer may include the preparation of materials and other developments that any such materials are done as work made for hire under u.s copyright law et cetera et cetera employers shall retain and own all rights and such materials so it's a very simple provision this one but it matters a great deal so restrictive covenants um let's talk about this this is restrictive covenants are kind of the meat and bones well not really meat and bones they're more like the biggest demand i would say that i get um when i'm drafting an employment agreement an employer comes to me and what they're really focused on is preventing their employee from turning around after work with them for a few years and opening up a competing venture right next door you know maybe a slimmer venture with less overhead that can undercut or underbid them and take away their business and destroy their livelihoods you know you no one really wants to be in that position as an employer and so employment agreements they have what's called restrictive covenants and they typically fall into three different types you've got your non-compete agreements your non-solicitation agreements and your non-disparagement agreements and i'm going to go through each one in turn and then show you some examples non-competes are definitely the most requested for the reason i mentioned above employers just they want very broadly for their employee not to be able to compete with them at all um not to open up competing shop [Music] anywhere typically i mean i usually have to scale to walk back employers expectations as far as how much they can get out of a non-compete because they are the most difficult restrictive covenant to enforce new mexico public policy heavily disfavors their use i don't include the word heavily here but bottom line courts don't like enforcing them the courts over the last 60 or 70 years have really vaccinated on this gun back and forth on whether they'll enforce them at all they balance the right to contract which is a fundamental right between two parties typically on equal footing at least in theory and the rights of employees to work and the rights of the state to not have former employees become wards of the state and that's where you really get into the heart of it public policy really doesn't like employers telling employees they just cannot work um especially in situations where there's no specialty knowledge changing hands there's no um there's no real legitimate interest of the employer in protecting anything that would be furthered by non-competing i'll give you an example of this i'm going to call them out by name um well no i'm not i don't want to get sued by them a certain restaurant chain that regards its employees as sandwich artists has been known to use non-competes and other means of restrictive covenants against their employees which courts are very remiss to enforce because the sandwich artists despite learning how to make the sandwiches as the employer would have them make them do not learn any specialty skills that would be detrimental to the employer if the employer were to go and work for for example a rival sandwich shop or a rival restaurant these skills learned from by those employees and the proprietary interests of employer are not such that non-competes would typically be enforceable as against those sandwich artists and so it's important to understand that a non-compete you know the courts require that they be reasonably limited both geographically and temporally meaning in time but the courts will also require that the non-compete in the first place protects a legitimate proprietary interest of the employer and you're not always going to have that so if you're talking about trying to enforce a non-compete against your cashier for example the person who works the cash register at your store courts i would be shocked if you get a court to enforce that a lot of it is luck of the draw depending on which judge you get but by and large they're not going to restrict those kinds of non-competes um but you know looking at the other requirements geographically and temporally limited um here's an example um this is a non-compute i did yesterday um during this the term of the agreement of employment which means while they're employed they can't compete and for a period of 12 months after employee will not directly or indirectly in any manner capacity and this next bit means they can't as an employee an owner a shareholder a competing business etc compete with employer by way of a competitive business and then it goes on to limit this to again 12 months and geographically limited to all counties in which employer does or did during the term of employment conduct business so you know you can't lock them out of the entire state of new mexico if you're only doing business in um leah county for example you can't prevent them from moving to albuquerque and getting work there i mean you could try but again you can put whatever you want in this contract courts are not likely to enforce it if it's overly broad um and again the breadth relates back to the proprietary interests of employer that they're reasonably legitimately trying to protect so that's non-competes in a nutshell again feel free to ask questions if you have any of the q a i'm taking questions at any time but the next section is non-solicitation agreements which a lot of people mistake for non-competes but they're actually very different in what they do and they tend to be a bit more enforceable a non-compete very broadly prevents the employee from competing but for starting up a competing business regardless of who their customers would be it doesn't matter if they're trying or not trying to coach customers or employees etc a non-compete prevents them from competing whatsoever non-solicitations are much narrower they prevent the employee from soliciting an employer's customers or clients depending on the wording of the non-solicitation i usually have one for each one for customers or clients i'm sorry customers are clients and employees i usually have one for employees and one for customers clients they still need to be reasonably limited they still may be unenforceable especially and i've seen this i've litigated this courts will often decline to enforce a non-solicitation agreement if they in effect prohibit a customer from doing business with your employees new business courts will either see that as an unenforceable non-compete or they will just see that as an unenforceable non-solicitation agreement but the the courts typically take great care to prevent um what would be an anti-trust situation basically your agreement is going to prevent the general public from choosing who to do business with courts don't like that courts won't enforce that especially as against those customers um i don't want to go too far down the rabbit hole here but i had a little lawsuit years ago where an insurance carrier was suing one of their former sales people and that sales person had gone off to start an independent insurance business and the insurance carrier tried to enforce the non-solicitation agreement that provided that those customers who were with the carrier couldn't choose to do business with the sales person and in trying to restrict the business choices or activities of the general public of customers non-solicitation agreements can go too far and become unenforceable so it's important to narrowly tailor them just to prevent the employee from soliciting those customers and not vice versa so here's an agreement here's a sample agreement with respect to employees this prevents your your employee from going off starting a new business and then taking your other employees with them or at least from soliciting them again you can't necessarily bind the other employees with this non-solicitation agreement so if your employee goes off and starts a new business and then your other employees see that and say hey i really liked that guy i'm gonna go work for him of their own volition that does not and should not violate a non-solicited agreement um the non-solicited agreement should unilaterally or you know unidirectionally um bar your former employee from soliciting your current employees for example or other former employees non-disparagement agreements um these non-disparaging agreements i don't get a lot of requests for them sometimes i include them as a matter of default sometimes i don't sometimes clients will ask to take them out sometimes clients will ask to leave them in it's mostly about 50 50 but some clients are genuinely concerned about their business reputations and their former employees going out and making disparaging remarks about them and the common example is yelp reviews employers do not want their disgruntled employees going out and torturing them on yelp which in a very real sense will cost those employers business people read yelp reviews they read google reviews they you know angie's list if that still exists people read these reviews so you want to prevent your former employee from doing that you have a non-disparagement agreement um often as a matter of good faith and so that courts look at it and say okay this was done in good faith i'll enforce this non-disparagement agreement i have both parties agree not to disparage the other employer agrees not to disparage employee employee agrees not to disparage employer that's a bit of a double-edged sword because um you know employer agrees not to disparage employee but if employee goes and applies for a new job and that new employer calls and asks for a if employers honest is that disparagement the answer is typically no and there's some statutory protections for the former employer in that case if they're providing honest limited um [Music] responses to the potential new employer there's some statutory protections but you really have to walk a fine line with non-disparagement agreements because conversely if you make this a singular obligation of the employee and not employer courts might look at that and say well i'm not going to enforce this as a matter of equity a lot if you're you know i'm hoping you're getting the sense here that a lot of these provisions especially restrictive covenants are at the discretion of the court as to whether or not to enforce it's just the the honest truth with restrictive covenants um the courts depending on the judge you get will try and enforce them to the extent they can be determined as reasonable but um some judges quite frankly will not and that's that is the luck of the draw and if you have a good attorney who's litigating the matter on your behalf they'll know the judges they'll know who they're likely to get a bad ruling from and they will recuse that judge but you can only accuse one and if you have to draw a second judge that is also unfavorable that's the luck of the draw so just know that these restrictive covenants the goal in a good agreement is to make them as narrowly tailored as possible to make them as enforceable as possible but there's still a chance they might not be enforced here's a sample non-disparagement agreement that is unique to employee that requires employee not to disparage employer for a period of 12 months just one year and you know you have to limit these temporarily just like everything else you cannot have a lifetime non-disparagement agreement um and you you can but again will the courts enforce it probably not [Music] but you know this is just narrowly tailored to disparagement that is reasonably likely to damage the business reputation or or the personal reputation of the owners of the business some final considerations for these restrictive covenants they should come with two clauses blue penciling and severability those are legal terms of art you're welcome to google them but the gist of it is blue penciling is something that allows the courts to reform your restrictive covenants making them narrower in scope or application if they're too broad and i'll give you an example a five-year non-compete too broad i've never seen one of that length in force except as against the seller of the business which we're not really talking about here against employees five years is too broad but if your employment agreement has a blue pencil and clause um that allows the court to reform the restrictive covenant making it narrower temporally or geographically courts will often but will not always reform it and i'll give you an example of why they won't if you in a clear act of bad faith have a 99-year restrictive covenant or say they cannot um work for any rival company or any other company anywhere within the country or the world i've seen some outlandish on competes i'll be honest with you but if you have one that's that outlandish the course will see that as an act of bad faith and even if the contract allows them to reform the restrictive covenant they will probably just strike it and they might make you pay attorneys fees it's yeah you don't want to lean too deep into the bad faith non you know restrictive covenant with the hope that the court will reform it if it gets to that point um but blue penciling will allow them to reform restrictive covenants um severability is the other half of this if the court finds that a restrictive covenant cannot be reformed um whether because it's just too outlandish or if it's prohibited by statutory law an example of that is non-compete against doctors new mexico in 2015 2016 the legislature banned those you can no longer have blanket non-competes against doctors they're just the doctor shortage public policy demands that we let doctors work so with a few weird limitations on that ban you can't have a non-compete against a doctor typically so severability clauses allow the courts to sever an unenforceable provision from a contract instead of just throwing the entire contract out because the entire contract is unenforceable other post-termination obligations things have to do with intellectual property for example those protections get thrown out as well so pretty much every contract you see should have a severability clause as a matter of course not just with respect to restrictive covenants but just as a matter of course you probably want your contract to have a severability clause i have written one or two that deliberately provided the opposite that you couldn't sever a provision because to those parties every provision mattered and they would rather have no relationship than a partial contract but that's the exception to the rule last but not least we're going to talk about boilerplate language and why it matters um boilerplate language it is um it's basically the everything else it's all that stuff you see at the end of the contracts and you think wow this is a bunch of legalese that means nothing to me why do i even need this and the answer is you need it because it does something even if it's innocuous even if it looks like it's just copied and pasted from other contracts it probably was honestly i copy and paste spoilerplate language all the time and then just edit the boilerplate language to make sure that it matches the contract and the needs of the parties i mean you have to do the work you can't just copy and paste stuff but assuming it lines up with everything i have that boilerplate language in every contract because it does specific things that really matter especially in the event of a dispute and i'll give you some examples here um let's just hop back governing law you know what state laws govern what countries laws govern but what what state laws govern for domestic contracts counterparts how can the contract be executed does everyone need to be in the same place to sign the contract they have to sign it at the same time can they sign it individually in their own home scan and send and you just have multiple signature pages i almost always allow counterparts but sometimes i don't entire agreement clause that provides that this contract is the entire agreement between the parties there's no secondary contract whether it's by emails or verbally everything the parties are agreeing on is wrapped up and incorporated into this contract it's very important it's often left out of contracts and the result is well maybe you had the secondary contract via an email or by verbal agreement you want an entire agreement clause dispute resolution are you going to compel arbitration or just do standard litigation will you require mediation which is an informal dispute resolution process where everyone goes in front of a mediator and they bounce back and forth and try and come to an agreement are you gonna require mediation i like mediation a lot of people don't um mandatory forum if a lawsuit or arbitration is going to be brought where is it going to be brought is it going to be brought in albuquerque new mexico rio rancho county bernalillo sandoval etc um set the forum will attorney's fees be allowed uh are the parties gonna each bear their own costs or will the winner get fees from the loser very important to have and a lot of people want attorney's fees especially if they expect that they will be the ones in the right um waiver provisions if one party doesn't hold up their end of the deal for some temporary reason you say okay i'll waive this requirement just this once you'd want a waiver provision that says one waiver is not a blanket waiver forever if i give you a waiver this one time you still have to hold up your obligations going forward it's an important class assignability um can you assign this contract to someone else this is important not in the the positives but in the negatives for employment agreements i mean yes as an employer you probably want to be able to assign the employment agreement to a successor if you sell your company but for employees you specifically want that the employee cannot assign the agreement you're hiring that employee you're not hiring whoever they decide to sub in and then voluntary execution advice of counsel you want it's just a basic statement saying the parties have read this document they understand it they understand that they have the right to hire an attorney to review it and explain it to them they have the right to hire an attorney and have that attorney propose changes they know what they're doing and they're executing this document of their own free will and volition um you know that um that deals with so many um potential claims that the employer compelled them to sign this document it's really hard to overcome a voluntary execution clause it's doable if you have a boatload of evidence to show that the employer compelled you in some sort of non-voluntary fashion to sign this thing but um that clause goes a long way and that's these are just examples of boilerplate language there's more that's why these contracts are so long they don't i don't mean for them to be daunting when i draft them but it's important to include these things and it's just important because again it goes back to predictability you want to know what state laws govern and you with a good contract you'll know because the contract says so you'll know where the lawsuit or arbitration must be brought because the contract says so you'll know you can recover attorney's fees because the contract says so and you'll know what's that what's in the contract is the entire agreement because the contract says so that's why the boilerplate language matters is because the contract is saying all of these seemingly obvious things so i'm going to give you some quick examples of boilerplate language and then we're going to move on to questions and if no one has any questions i will tell stories for a little bit and then we'll wrap up but um governing law this is an example of governing law provision really basic just says new mexico law applies um you'd be shocked that if you know if you don't have this provision and the employee moves um or maybe you have an employer you know maybe you are an employer based in new mexico but you have an employee in texas or idaho and you know you want to have this provision even bearing in mind that if you're a new mexico employer with the new mexico employment agreement and this provision and you have like an idaho employee for example idaho employment law will still apply to some degree because you're hiring an idaho employee those employment laws and regulations will apply as well but with respect to contract law and an employment agreement is a contract you want to specify which state's contract laws are going to apply and so this provides new mexico um enforcement um attorney's fees expenses costs it's not just attorneys fees you'll have filing fees other expenses of enforcement and collection of the judgments etc um you know you want to be able to collect all of those costs from the other party if they lose again voluntary execution and advice of counsel um you just want them to assert that they're voluntarily executing this contract they've had the chance to obtain legal counsel whether they did or they didn't it's immaterial they had the chance they're acknowledging they had the chance just important acknowledgments to have lastly i want to really emphasize utilize your resources because it's not enough to just recycle the same old employment agreement over and over or pull one from the internet and plop in some details you have resources at your disposal as a small business or mid-sized business owner it's important to know them and use them and the best way to do that frankly reach out to your local small business development center liaison or visit their website set up a no-cost counseling session uh they can help out in terms of advice on a lot of these issues or for the ones they can't they have a wealth of other resources and connections in the community they can refer you to someone who can help and they have a network of attorneys they can refer you to or at least a a database of attorneys i wouldn't call it a network necessarily but they um you know they're a great resource and a great first stop so reach out to them if you have any questions or if you you know want to figure out your own situation they can help your point in the right direction definitely and they can point you in the right direction and to the local uh center in the area that's closest to them i wanted to update everybody just very quickly is that um and we are going to be seeing ian again so we will have him for some other webinars but coming up we are going to have uh mr larry donahue is going to be here talking about investor partners and the relationships that's coming up you can sign up for that one we are also going to have eric spellman coming up your more most important online stat you cannot ignore we have a bilingual session coming up on staying healthy mentally and physically healthy that is going to be next week also so look for that one and then we're going to have also eric spelman coming back using hashtags the small business secrets and ian also put up some of the other ones that we have coming up too so i just want to remind everyone that we are a great resource and we're here to help absolutely i mean the just the variety of workshops is astounding and they're just they're great knowledge bases and resources to learn from so i cannot recommend enough going through and looking at some of the other workshop offerings as well because of you know it's it's important as a business owner to grow your knowledge and that in turn will help you grow your business so do we have any other any questions from anyone i'm happy to take the time and answer anything you might have um you can also raise your hand and we can allow you to talk this is the final wrap-up guys if you have anything let us know and i don't see anything coming up so i am going to um did you have any final words before we let them go for today yeah you know i've got some you know you know with respect to employment agreements um we talked very briefly about the differences or the fact that independent contractors and employees are different their agreements have a lot of overlap but i do want to give you a word of caution that um you would probably not want to copy and paste an employment agreement to an independent contractor agreement without really taking care to change certain provisions specifically you know the whole point of an employment agreement is to show that they are employees you want to show that they you have an employment relationship and clear expectations independent contractors they're very different you want to go to great lengths to show that they're not employees so there's a lot of language that needs to go into that that you just won't find in an employment agreement so a word of caution there just don't copy and paste some other things i didn't really talk about in this presentation that you might be oh we've got um someone in the q a ask the question um would you recommend that the employee have legal counsel prior to signing the employment contract um it's not that i would recommend it it's that you want to make sure that they understand the option i just spilled coffee all over my desk but as i mop that up i will say it's you don't want to recommend that they have legal counsel in every case because that can really slow things down but you know it's important for the courts to see that the employee is aware that they have the right to legal counsel if the employee doesn't acknowledge that when they sign a contract courts are less likely to enforce that contract against the employee as a matter of equity of course we'll say well we know you've got this contract but we're just not going to enforce it because we don't feel that the employee understood what they were signing and had or we don't believe that they even understood that they had the right to ask someone about this contract before signing it so i don't recommend that employees have legal counsel they're not going to want to most employees aren't going to want to spend the money to hire a lawyer though there are a lot of low-cost contract review services but it's important that the employee at least understand that they can have a lawyer that all make sense i think so all right that's it for today guys we will see you next time you guys have a great day thank you everyone