5 Things to Consider When Drafting an Employment Contract in Chicago
Chicago Employers: Invest Time and Resources for Compliant Employment Contracts3 min read
When it comes to developing a comprehensive employment contract, Chicago employers need to invest the necessary time and resources to ensure that they remain compliant with the city’s local regulations. There is a complex web of legal implications specific to the State of Illinois that must be considered when drafting an employment contract. From understanding applicable wages and defining positions to outlining employee benefits and establishing non-disclosure agreements, it is important that businesses put the protection of their interests, as well as those of their employees, first.
Below, we’ve outlined the five things employers should be aware of when drafting an employment contract in Chicago.
Salaried vs. Hourly Positions
Chicago employers need to consider the applicable city, county, and state laws when determining if a position should be considered salaried or hourly. The guidelines for these classifications are often different, and, when violated, could land employers in legal hot water.
The majority of hourly employees that exceed 40 hours per week are entitled to overtime wages. However, any employee who is classified as “exempt” because their job duties qualify them as a professional, executive, or other “white-collar” role is not. Therefore, it is in the employer’s best interests to carefully review the laws in Chicago and define a position’s job duties to ensure an appropriate classification.
Minimum Wage & Fair Wages
One of the key components of an employment contract in Chicago is for employers to clearly state the wages they will pay their employees. Not only is it important to familiarize yourself with the city and county laws dictating the applicable minimum wage, but employers also need to consider their general pay structure, overtime rates, and any applicable bonuses or incentives.
Fair wages are to be offered to all employees regardless of their positions and, depending on the company size and annual turnover, might require employers in Chicago to adhere to different wage and overtime laws. Furthermore, although not required by law in the city and state of Illinois, employers should consider instituting a fair and equitable salary or wage increase policy to put their employees’ interests first.
Employee Benefits
Chicago’s local regulations also dictate the employee benefits an employer is required to provide to their staff. For example, although unpaid sick leave is not mandated by law in the city, certain employers may still be required to provide it depending on their size and turnover. Vacation time for salaried employees is also subject to both the size of the business and applicable local regulations.
Employers in Chicago should also consider detailing an employee benefits package, which could include an employee wellness program, educational support, and retirement contributions. For employee benefit packages to be legally binding, they must be stipulated in the employee’s contract.
Non-Disclosure Agreements
It is important to understand the contractual implications of including non-disclosure agreements, also referred to as confidentiality arrangements, in the contract. Non-disclosure agreements are not legally binding without the employee’s written consent, which should include a signature if the employer is looking to enforce them.
Employers should also consider addressing any potential legal implications of intellectual property and the extent to which employees are bound to signing non-disclosure and non-compete agreements before or after their employment with the company.
Termination Clauses
The termination clause of an employment contract is arguably one of the most important factors employers in Chicago need to consider when drafting the agreement. The clause should cover any details related to company expectations upon termination, such as providing two weeks’ notice and any applicable severance payments.
This clause should also state the circumstances for termination, under what conditions the company reserves the right to terminate the employee, as well as what the employee is entitled to after they’ve been terminated from their position.
Developing a well-rounded and comprehensive employment contract is a complex task. Chicago employers need to consider the above five factors in order to ensure that the contract serves and protects the interests of the employer and employee alike.
For assistance in drafting an employment contract, employers and individuals in need of legal counsel can consult with one of the experienced lawyers at UpCounsel. Whether you need a one-time consultation or an entire freelance legal department, UpCounsel and its attorney community provide high quality, cost-effective legal services tailored to the needs of businesses.
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