Work Force Solutions: Using Employee Handbooks and Non-Compete Agreements

It seems like just yesterday that business was booming.  The phone rang off the hook, and scheduling was three months out.  In the good old days, companies had to worry about having enough employees to satisfy the customers.  (Now, having enough customers to support the employees is the challenge.)  In the busy years, finding and keeping employees was hard, so employers developed incentives to keep employees content.  Companies offered bonus programs, extensive benefits and allowed employees to conduct their own business on the side at times.  Suddenly, times have changed.  Belts are tightening as companies face the decrease of business.  Lay offs, salary reductions and benefit reductions are often necessary.  It might be time to reconsider allowing employees to conduct their personal side businesses. Not only could this practice detract business from the company, but in many circumstances, employees use company time, supplies or tools for their own purposes, at a cost to the company.

Ironically, when times are good and business is booming, companies often neglect to sustain the very practices that make them strong in the first place.  Having an up-to-date employee handbook, non-compete agreements and other protocols strengthens a company.  In a busy economy, the day-to-day business may overshadow the paperwork.  Protocols may become out-of-date and new standards that are needed may not be implemented.  Obviously, when business is challenged by today’s economic woes, these standards are needed more than ever.  It is not too late to implement them.

The first thing companies should do is adopt an employee handbook.  The handbook will cover a wide array of standards, but a few notable ones will be highlighted here.  Companies with timecards should have a specific clause about falsification of employee work time.  Employees who are logging more hours than actually working are wasting company funds.  Additionally, a client may witness an employee clocking out early, and the partnership between company and client may be jeopardized.  Another common problem that should be addressed in the employee handbook is that theft of any kind is not acceptable.  Some employees might think that taking inexpensive work items are ok, but the culmination of this practice over time could cause serious financial trouble for a company.

The next step for companies should be to have all new and current employees sign a non-compete agreement.  A non-compete agreement will make sure that employees are not working on side jobs that detract business from the company, nor will they open their own business right next door.  An example of the former is an employee going directly to a client and offering to do a job on his or her own time at a lower price.  Companies stand to lose clients through the fault of their own employees in these situations. A non-compete agreement can prevent this from happening.

Having all new-hires sign an agreement is acceptable.  For current employees, it is a little more difficult to implement a non-compete agreement as a new standard.  Typically, when offering something of value, a non-compete clause is acceptable.  For example, for any promotion or bonus an employee is offered, this would be an opportune time to institute a non-compete agreement.

All non-compete agreements should be reasonable.  Agreements should not last too long, cover too wide a geographic area or prohibit a former employee from engaging in too many types of business.  Some states have restrictions on non-competes.  Every company’s human resource specialist should be aware of the restrictions in their respective state.

In addition to non-compete agreements, there are a few other ways companies can prevent losing business through employee’s questionable conduct.  Companies shouldn’t allow employees to take home a company vehicle if the employee could use the tools for side jobs.  If the employee does not have access to tools on the weekend, it is less likely he/she will do a job if he/she needs to purchase new tools.  Companies should talk with their suppliers.  If any employee seems to be purchasing materials or tools for their personal use, it may signify that they have a side job.  Companies should also keep an inventory of supplies, particularly the more expensive supplies.

When employees are aware of their company’s expectations and the regulations of a non-compete agreement are clearly stated, all parties involved will benefit from a strong working relationship.