As you grow your business, the time will come when you need to hire your first employee. Of course, there is something to be said for independent contractors and what they can do to help you grow your business. At some point, however, employees will become necessary for you to grow your business.
So, what do you need to know before you make your first hire?
There are a few things you want to consider (at least from a legal standpoint) before you have made your first hire. They revolve around how you document your employment relationship.
In Alabama (where I am licensed to practice), we have what is called “At-Will Employment”. That means that any employee relationship can be terminated by either side for any [legal] reason or no reason. That does not mean that you cannot have employee contracts or policies or any other written document outlining the relationship between your business and your employees.
What it does mean is that the term and termination provisions of any employment relationship, unless changed by your contract, are completely open. There is no set term and there are no requirements for termination. Unless you want it to be different.
So, before you get started, you want to consider how you will tell your employee what to do and how will you define the relationship. There are two primary options when it comes to your first hire:
Employment Contract or Employee Handbook
Each of these has benefits and drawbacks on your first hire.
Employment contracts are shorter, more specific to your initial hire and focused. This can be a benefit to you as it is easier to get started and it allows you to simply think about the one hire you need to make now.
The issue you can run into with an employment contract is that they only solve your problem now. They are not necessarily focused on creating systems or policies and they may not cover everything that is necessary. If you do choose to start with an employment contract, you want to make sure you do not destroy the at-will nature of the employment and that you allow policies to be created and referenced within the agreement. Because, once you hire someone you will need policies.
Employee Handbooks are the go-to employment document because it is easy to cover all of the potential positions and other legal and regulatory requirements in one place. Also, because it is a handbook, you can make adjustments once and deliver them to everyone. This is, technically, possible with employment contracts, but it is more difficult to manage several contracts that are not all exactly the same than it is to manage your one handbook and policies.
Once you have made your decision about how to document your relationship with your employees, don’t forget that you need to put together policies for how your employees deal with certain things. When you hire an employee you are giving some level of authority to your employees to transact and act on behalf of your company. If you don’t create policies and maintain them, you don’t know what kind of trouble you can get yourself into.
If you want some more to read about employee policies that may be beneficial when thinking about your employees check out these posts: