Employment Agreements and Non-Competes: What HR Needs to Know

Welcome to the Generous Benefits Podcast, where we help employers build people-first benefits that make business sense. I'm your host, Amanda Brummitt. Today, we're talking about employment agreements and non-competes, an area that is getting increased scrutiny and attention. Attorney Amanda Hill joins us to break down what HR leaders need to know, what has changed, and how to think about protecting the business while staying fair and competitive in today's workforce.

Amanda, thank you so much for being here. I know you are a very busy woman, so I appreciate you carving out some time to come share your wisdom with us. You're welcome. It's really I'm really happy to be here.

This is a topic close to my heart. Yeah. Well, I know a lot of our listeners, definitely people in the health care space are going to know your name already. But we also have a lot of listeners that aren't in health care.

So give us the elevator pitch on who you are professionally and then also tell us who you are personally. Sure. So I'm a health care lawyer in Texas. I represent doctors all across the state.

I'm very passionate about helping doctors. That's my passion. That's my mission, I always say, is helping doctors. Why I was put in this spot, I don't know.

But I love helping doctors. A lot of employment issues, transactional healthcare work, buying and selling companies, writing contracts. But mostly, I really just like to solve problems. So I really want my clients to be able to call me when they're at their worst, any time of day.

You know, you have to have people to call. And that's one of the stressful things about health care is that, you know, a lot of people in health care feel that they're all alone and that they're fighting the mafia or something. It's just where do I turn for help? So I really love that part of my job.

But I'm acting as general counsel to a lot of different groups. Just give them advice, help them write their agreements and work with HR departments. A lot of HR issues pop up in any company, you know, and they just wish they could have five minutes of a lawyer's time. and say, you know, do I need to put this in the employee handbook or is this the right way to fire this person?

That kind of stuff comes up. And on a personal note, you know, I'm a mom. I have two kids and they're growing up too fast. One's in college, one's in high school.

I love gardening and cooking and I'm very domestic. They call me Martha some. I was on. I know this.

Yes. I was on a television show called The Apprentice. Remember the old reality television show? And it was with Martha Stewart because I really love the domestic arts.

So I did that for a while. So I've done some fun creative adventures. I'm a writer on the side. So I've written a couple of books.

So, you know, you can't can't hold me down. I find that creativity is sort of what balances this out. If you have a career that is too heavily focused on the intellect, you know, if you don't find humor and if you can't find the creative side, then you're just going to be, you know, lopsided. So I so I love to bring that.

In fact, I've tried to bring levity even with my clients. We laugh a lot. We try to joke around like, well, you know, if you're going to be in this situation, if you're going to have to hire a lawyer, let's at least make it palatable. Right.

Yeah. So I love what I do. You know, you don't hear a lot of lawyers that are like, I love my job. Most of them just can't wait to get to Friday.

But I really love my job. I like helping people and solving problems. And so I've done it for 26 years. Wow.

Yeah. And your passion shows every day. Oh, thank you. Yeah.

Well, let's talk about employment agreements. OK. And just start at the beginning. Yeah.

What is an employment agreement? What are the most important components that employers should understand? Well, I love employment agreements because they, it's strange, I know that a lawyer would say that, but they set the tone and the rules of the road for the employer and the employee. And it gives you some rights.

You know, if you just have an offer letter that you send to an employee, you know, okay, they may or may not follow them. They may or may not give you notice when they leave. They may or may not do anything. And you have no legal recourse against them.

I mean, as an employee, there are certain laws that apply to you right outside of a contract. Certainly, they can't discriminate against you, retaliate against you. Those are protected by law, but you don't have any contract rights. So if they stop paying you, you can go cry about it to the Workforce Commission.

But otherwise, you know, what are you going to do? And so I love having contracts that protect both the employer and the employee, right? It gives both sides an opportunity to say, you know, these are my responsibilities and those are your responsibilities. Now, we all have to play accordance with these rules, and if we don't, there is some legal responsibility to that.

So I find it very tidy to have this whole agreement that's locked up and everyone knows the rules, and if you don't, you know, have any protections in there, then you just really have a workforce that kind of comes and goes. Now, historically, doctors have always had employment agreements. Most nursing staff and lower level positions, you know, front desk and otherwise, they usually don't. So employment agreements aren't for every single, you know, position in a company.

Usually they're a higher level, executive level role that has an employment agreement. It doesn't mean that you have to. I think people are confused by that, especially in doctors. They're like, there's no employment agreement?

Like, it's not a legal requirement that anybody has an employment contract. This is an at-will state here in the state of Texas, and a lot of states are at-will, and you can just hire them and start paying them. But I do think it's a good idea for any licensed provider, you know, anyone that especially is highly paid, that you really want to lock that up. And mostly for the biggest advantage is that you know when they're going to leave and they're going to give you a certain period of day's notice.

You don't want to be left holding the bag on a Friday when some impivotal role in your entity tells you, I'm out of here. Peace out. I'm going to burn this place to the ground. And you're left with no recourse.

So that's why I think contracts are really helpful. And I find them enjoyable to look at, even though I've probably looked at thousands, I'm not exaggerating, of contracts. In my 26 years of practicing law, every single day of my life, I'm looking at contracts. And they're all different.

And that's what's so bizarre. You know, there is no standardization of all of these agreements. Most of them have, even now, provisions that I go, what? Why would they put that in there?

That's crazy. Yes. And always editing and changing. But the biggest piece of advice I want to give your listeners is pick your battles.

You know, when you're fighting a contract, you don't go in there, guns a-blazin' and bleed over the whole thing, because that makes you look like sort of a problem, or maybe a lawyer who's trying to justify your hourly rate, or a nitpicker. You want to be able to look at a contract and say, what are the really important things that I'm going to fight for? Or what are the things in here that are really going to hurt me? Right.

And try to focus on those things. And that's, you know, one of the things we had talked about before. One is, what is the biggest thing that you need to pay attention to when you're ever looking at a contract? And it's how to get out.

You know, I mean, how do you get out of this arrangement, this employment deal? If you are stuck in a bad job, if you're working for someone you hate, if it's the environment, it's just not the right fit, you know, what are the rules and how do you extricate yourself from this job? And it's all outlined. And if it's not very clear, and if you don't have a way out, that's a big problem.

So I'm a big fan of anyone that's trying to get a job, of walk through what it looks like to leave that job. From at the very beginning yeah yeah and i think that applies to the employer as well like i want to know how i can get rid of you or how we can separate this relationship if it doesn't work out and i need to follow the rules as well yes and many companies come to me as like an outside counsel and they say we have to get out of this contract it's terrible this vendor is bailing on us and you know what is the termination section that's the first thing i look at is how do you get out?

Is it how much notice do you have to give? Sadly, sometimes employers don't realize there's just so much boilerplate. You know, it's really hard. I get it to like just read all the fine print and just go, it's fine.

It's standard. And they just sign it. But then this is what burns companies the most. When they get a contract that says, sure, you can get out with 90 days notice after the first term.

You're like, wait, what's that? What's the first term? It's 10 years, okay? So all of a sudden, you think you have a 90-day out because you read those words, but then you go, wait a minute, this is a five-year contract, so I can't get out until after that?

That's another two years. And the vendor's like, that's right. You can surely, certainly give me a check for the next two years of monthly payments, which of course no one wants to do. So those things you have to look at before you sign it is let's assume something's going to go wrong.

I mean, not to be negative, but, you know, let's assume that this billing company or this janitorial service or this courier is not going to work out. How do I let them go? Is it clean? Is it easy?

Do I just give them notice and we're done? Do I have to wait a certain period of time? But I've seen a lot of different termination sections, and you have to make sure those are really lock, you know, locked down. Right.

When it comes to employment agreements in general, is there a certain magic timing that you think is ideal for both employers and employees? I would say outside of health care, it's a little shorter. You know, on the executive level, you know, probably a few months is reasonable. In health care, it's usually at least 90 days because it takes time to credential new providers and there's a bit of a lag there.

But I've seen some executive level employment agreements that mandate six months notice, you know, easily. So it really depends is the answer. I think anywhere from two to seven or eight months is even the range of reasonableness. When you get to a year, that's too long.

I mean, unless you are the CEO, okay, which is the one exception. Any other job, you should be able to give three to six months notice. And I think that anyone's going to be able to be fine with that. If your contract doesn't specifically allow for it.

What I will say is the problem is if you give like two weeks notice. If you're in an employment contract and your contract is silent about termination and you just walk away from a job, you're going to probably burn a bridge. And another thing I see is just contracts silent about it, employment agreements that say, here are the reasons why we can fire you for breach of contract. It's called termination for cause.

But there isn't a section that says termination without cause. So there really isn't any way out of it other than someone breaching the agreement. Oh, that's just lazy attorney. Yeah.

Either lazy attorney or just they don't, they want to lock you in. Sometimes employers think, okay, they think that they're doing themselves a favor by saying, aha, I've got them. I've got them for two years. There's no way out.

What that does is is sometimes backfire. Because what I like to say, if there's no back door, then someone's going to kick down a door. They're going to find a window. You know, they're going to bust through it.

So why not just make it easy and create a door? So if there's no way out, they're going to argue you breach the contract or you harass them or it's a hostile work environment. It's going to create drama to get out versus just leaving. So I just think it should be easy for anyone to come and go.

You know, another thing that surprises me, Amanda, about employment agreements, and I have seen this on both sides, the employer as well as the employee, is there's a lot of emotions tied. When, right? You know this. There's so much emotion when someone terminates a contract.

It's like a personal affront. And I always say, why is everyone upset that this employee quit and gave proper notice? They're following a contract. Everyone agreed to these terms.

Same thing as I've had, in my case, a doctor, but, you know, I'm sure it applies with an executive where their contract is not renewed and they followed the exact terms of the contract. And of course, they're like horrified and I'm going to sue them and they have no right to do this. I'm like, they have every right to do that. It's literally baked into the contract.

So I think that you have to strip emotion out of it and just say, this is a legal document where both sides have agreed to these terms. And if one of the parties triggers those terms, you got to let them. Absolutely. And can I add, call your therapist first, all your feelings out, and then call your attorney.

Otherwise, that is a very expensive phone call. That's true. I'm sorry. They do call us attorneys and counselors at law for a reason.

I have a lot of tearful clients that are calling with all kinds of problems, and I hate that. I wish that we weren't so expensive. Sorry. But you went to school for a long time and you had a lot of knowledge.

So that is true. That is true. Sometimes in an hour, we can solve a problem that will take you a lot longer. I'm very nervous in this day and age about people GPTing all of their agreements.

Yeah. I mean, how many times do you look at one and go, wow, this was written by AI? Oh, every day now. Every day now.

And also I have clients that email me with AI drafted emails saying, you know, these are the issues that I've identified. What are your thoughts? I'm like, whoa, okay. The problem with that is not that there are not some good nuggets in there.

You know, you're always going to find some truth in Claude and AI-driven things. It just doesn't know what's important and what's not, or what to fight for and what you shouldn't, or what another side's never going to give on. So, you know, it just kind of overdoes it. And what I have to do is spend more time going through and answering all of those AI-driven issues, you know, I put in air quotes, that they've identified that aren't really issues at all.

But I have to explain that to them because AI thought of it and now I have to go disprove it. So it's a little frustrating. Also, AI-driven contracts always have so many issues to have to go through and clean up. So it's just something I've noted.

I also, as a writer, right, and as a creative, we all have a voice, you know, a written voice, the way we sound with our words. I know it sounds funny to people that aren't writers, but we all have a style. You know, if you, Amanda, were to send me this really harsh, aggressive, blunt email, I would say that doesn't sound like her. You know, it's not the way you talk.

It's not the way you act. So what happens when you run everything through, AI is that it doesn't sound like you anymore, and people don't believe it actually came from you. And I think we need to keep our voice into everything we do, even if it's editing a contract and having this negotiation back and forth of, these are some issues that I'd like to point out, these are some concerns that maybe we can talk through and then change in the agreement, but let's keep the humanity in it, right?

And pick the battles that need to be fighting and don't act like we're talking in a certain way that's not really us. Yeah, it's actually very similar, I think, to picking the right kind of attorney. If I have a tax complication, I'm probably not calling you. I may call you to find out who your tax guy or guy is.

Or I'm not calling a family law attorney. So why would I rely on Claude? Yeah, I don't want to foul your will or your divorce or any of that. So yes, definitely employment contracts.

I'm the one to go. But it's certainly true that, you know, we everyone has a certain role. I love HR departments. I work with them every day because they really are the center, kind of the hub of any organization.

Right. Because we're a people driven world and we all have to deal with people. So a lot of times it's it's stressful when you have employment agreements but then also you have you know routine work problems and you're like okay well this isn't really outlined in the contract but i don't know how to handle this now they need fmla and there's a problem and they want to be gone and they don't have this kind of pto and and you know the first question is what does the employment contract say or is there something that stops you from doing that and if not then we go to other you know other issues but it certainly plays a role in a lot of discussions with hr is get the contract out, you know, or what does it say about that?

And nothing? Okay, great. Then let's go to policies and see what the policies say. If the policies don't say anything, then what's reasonable?

You know, and there's a lot of hierarchy you kind of have to go through, but it's fun. To me, it's like a puzzle, figuring it out. Yeah. Those two things you said, though, I wish we did that first.

Let's look at the employment agreement. Let's look at our policy and procedure manual. And why isn't that the natural first two things we do? I think people get emotional and they get angry, you know, especially in our world and health care, but in a lot of professions right now, it's kind of a hair's trigger.

You know, people are very upset that they think that guy's not doing the same work that I'm doing or they're not billing as much as me or, you know, there's a lot of competition within entities and organizations. And so you're quick to be upset. They're late all the time. That's unacceptable.

I'm going to jump to that or they need to be fired. And just to take a step back and say, OK, it's not about who's better or who's worse. Let's just from a employment perspective, you know, what are the rules of the road here? If they're late every single day and it's delaying the entire company because this one person's late, well, then let's think about that from an organizational perspective.

What are the rules that apply? You know, how do we communicate that well to the employee? Does the contract have any language about it? Does the employment manual talk about it?

Are we discriminating against them? Do they have a legitimate, you know, handicap or FMLA issue. And it really should be like a checklist in your brain that you go through. The contract is one of those things.

Yes, absolutely. And while the majority of our listeners are in Texas, our second biggest listenership is in California. And so, of course, our Texans always like to point out we're an at-will employment state, but that does protect you from a wrongful termination lawsuit. And so you still want to do all the things you just talked about.

You know, I always like to, I always say to people that use fairness, I hear a lot of fairness arguments in my life, right? It's not fair, Amanda. I'm like, I know, I'm so sorry, and I hate that all these things are unfair. Can people fire you?

Usually, yes. Yet, even if it's against the contract, newsflash, people do bad things every day. You get terminated, you know, you are just, people are discriminated against, and sometimes it's more expensive to fight it. I talked to a client the other day.

And I said, listen, we're going to settle this non-compete fight for $20,000. Okay. It's better than 500. And I know you don't want to pay a dime and you think the whole thing's unfair, but it's going to be so expensive to go through a whole injunction hearing.

And this is really a pretty good deal." And they were just like, that's not fair. And I thought, I know. Life is so not fair.

And I wish, and part of what I try to do is just risk mitigation. You know, companies, I learned this, this is funny, this was like my early, early on in my legal career. I was the general counsel of the medical group. And I said to them, this was, you know, HIPAA was all the rage.

And I said, this is a HIPAA issue. We have to put this whatever policy in place and do all these fixes, because it's going to violate HIPAA. And my boss looked at me and he said, so what? I go, what do you mean, so what?

It's the law. And he said, yeah, but what's the penalty? If we don't do this one thing, what can happen? What's the worst that can happen?

And I said, a $25,000 violation. And he said, okay, well, what you're telling us is going to cost 80 grand to fix. So we'll take the hit. And that was a real learning point for me.

It's like, sometimes you do the best you can. But you have to always look at the risks. You know, the risk of doing nothing is cheaper than the risk of making everything perfect. And when you're very rule-driven in an entity, that's hard to grasp.

You know, you want to follow all the rules and you get upset when one is broken. But I think part of this life and running a company is going, well, which ones should I risk and which one should I not? And so sometimes that's what I get a phone call is, is this worth it? You know, is this something I need to take care of?

More and more, it's, you know, looking at it from a big picture. Isn't that life, though? We should look at things from a 30,000-foot view. Yes, absolutely.

And you mentioned non-competes, so I'd love to dive into those. I know, at least here in Texas, we've just had some recent changes. And so, can you maybe explain what a non-compete is? And then I should have looked this up before we started recording, but I don't know if all the recent changes are specific to physicians or if these have changed across the state.

So, yes, I know all the things. So non-competes are basically provisions in a contract that make sure that the person that's working for you doesn't compete with you for a certain period of time after they leave the job. So it's usually one or two years after they leave your employment that they can't directly compete with you. Usually it's within a certain radius.

You know, a certain mileage radius, or maybe it's counties, or sometimes even the whole state or more. They're written all different ways, but they are highly tuned to cause, to protect your company from competition. That's the reason for it, to protect your business interest. Now, every state has their own version of a non-compete.

California has banned them. So they, to your California listeners, there are no non-competes. Most states still have them. Thank you.

Texas being one. And in healthcare, they just changed the law last year, which we were all clinking champagne glasses about because it's really good for doctors, where they narrowed it to five miles in one year. Which is really reasonable. Really reasonable.

Yes. And they changed it to say that if the employer terminates you without cause, it's void, which is like great for a doctor because the worst thing in the world is when a doctor gets fired and then they say, oh, and by the way, you have a non-compete. It's like, well, that's insult to injury. Yeah.

And it depends a hundred miles away. And a lot of these non-competes were wrapping around every single location of the practice or the hospital. Now it's the primary practice location. So it's a great law.

I mean, I'm pro doctor, so anything helps doctors. But even outside of doctors, they still have to be reasonable in time and scope. So if you have like a nationwide non-compete, I can tell you right now, that's not going to fly. Yeah.

And I've seen them. I just saw a friend of mine who lives in Tennessee sent me her husband's contract. He's not in health care. And she was like, what do you think about this?

And I go, well, first of all, what law applies to the contract? And she was like, the what? The huh? So you go to the bottom of the agreement, say what law applies.

It was Massachusetts. I was like, okay, well, you go look up Massachusetts law and see what their rules are. They're pretty narrow. You have to have certain things in the non-compete for them to work.

None of these were in there. And it applied to the U.S. and Canada, which is insane.

You know, you can't be prohibited from the entire nation. So you still have to be reasonable in these non-competes. And most states are now passing local laws. I don't mean like on the I mean on statewide laws to narrow non-competes to where they really are somewhat more reasonable.

Because I think that it was really hurting certain trades, you know, certain industries that were like, what, we can't work? You know, we have to earn a living. And so they're a little more reasonable now. I know a couple of years ago, gosh, I don't even know how long it was now.

There was the Federal Trade Commission opinion that came out and it had the news and it was huge. And they said non-competes are illegal and everyone cheered. But they didn't have the power to make that kind of decision. You know, that's a five-person committee that's up there in Washington.

And they don't get to usurp, you know, all the different states and all their laws. So that got struck down. So people remember that and they think, but didn't the federal government outlaw it? I'm like, no, they, the Federal Trade Commission said that they thought they were bad.

But the, of course, the courts turned that around and said, you don't really have that kind of power. So they stopped it from going into effect. So now it's really up to your state. And like I said, in Texas, it's, they don't want to stop people from getting jobs.

And so it's going to have to be pretty narrow. And there's also ways to fight it. Another thing I get asked a lot is, well, what happens if you do violate it? It's a great question.

Yeah. You know, if you say, well, forget it. I hear you that I have this non-compete of 25 miles, but I'm not going to follow that. I'm going to get a job anywhere.

Well, the other employer... You know, the poor you just left can file an injunction against you and go to the court and show the contract and stop you from working. And that's how it works. And then the person that you're about to go to, the new job, when they find out that you have this non-compete, you're like, you know, a diseased person.

They're like, whoa, we don't want anything to do with you. You get that cleared up before you come to us. So you really can't just ignore them. You know, if you really think your employer is reasonable, then you should go to them and say, look, this is not in competition with you.

This group doesn't even see the same type of people or they don't even do the same type of work. So why would you care if I went to this group? And hopefully you can form some kind of compromise. Now, at least with doctors, there is a requirement of a buyout.

Right. Is that unique to physicians? It's unique to physicians, but still some non-competes still have them outside of health care, but mostly physicians where they basically have to quote a certain, you know, amount of money and say, if you pay this, it's usually, you know, the way the law reads, it's the last year of your salary and your wages. But if you pay that, no, it's not nothing.

It's hundreds of thousands of dollars, but then you're done. You're out. You can say goodbye to the non-compete. So there's a lot of doctors paying buyouts.

And if you can, you know, if you're not a doctor, I still like the idea of having some way to get out of this thing so that you can just pay that money and move on with your life. And sometimes you can actually get a bonus from your new job that will help you cover the cost of that non-compete, right? You have to be kind of careful about that, okay? Because you don't want like a tortious interference claim.

Yeah. What you don't want to do is to have the current employer go sue the future employer for saying you're interfering with my contract. So that's just like try to keep those worlds separate and pay your buyout. But sometimes you can get, I guess, compensated in the end by getting a bonus from your new job.

But, yeah, they're a hotbed of fighting when it comes to non-competes. We hear a lot of infighting about it's not, you know, it's not reasonable. Now, remember, the new law in Texas, at least, went into effect in September of 2025. So if your contract was written and signed before then, you're stuck.

You're stuck with the old law. Can you get an argument, though, for maybe trying to get out of it? Um, to the extent that, I mean, generally Texas judges don't like non-competes. You can see that by the fact they keep narrowing the law.

I mean, that's some evidence, but at the end of the day, you're going to still be able to get away with about a 25-mile, one-to-two-year ratio under the old law. But here's the kicker, and I want everyone to hear this little inside scoop that you only hear here. If your contract auto-renews, then boom, new law in effect. So if your contract expires and you renew it, it's like you don't get out of this new law just because you signed the thing originally 10 years ago.

So a lot of people are waiting, you know, to try to either they extended, either they drafted it in 2024 and it's like got a five-year term, you know, and so they don't have to worry about it. But if it auto-renews, as an employer, you really do have to pay attention to this. Oh, OK. Is that the case with any kind of evergreen contract that auto-renews that then you...

If there is a law on the books that applies, yes. Typically, they will say either created or renewed. After September 2025, these things start to come into effect. A lot of employers are just ignoring it.

They're like, well, you know, whatever. We formed that a long time ago. I'm not going to bring it up. And you don't have to bring it up.

I wouldn't either. Just know that your people are going to come and tell you about it if you don't. So many people are go ahead and get the amendments, you know, drafted and create a new amendment, you know, trying to fix it. And all new contracts are going to have updated language.

Or if they don't, you absolutely should fix them. And a lot of people don't realize that, you know, a non-compete doesn't necessarily hold water. They mess them up all the time, especially with doctors, because doctors have certain things that have to be in them. There's certain required things, you know, that's in state law, like be able to get a patient list and you have to have care and treatment with, you know, all these little bullet points that are required.

And people leave those out all the time. And you're like, ooh. And of course, if I represent the doctor, I'll say, don't point that out. That goes in your favor.

Of course, if I represent the employer, I'm like, you better get those in because otherwise they're not going to hold it. So it's fun to try to figure out, you know, from a strategy perspective, how to argue them. But, you know, non-competes are an important part. If you're a small business, I get it.

Yeah. You know, you spend all that money training this doctor or this employee and you pour money into them. And maybe sometimes you pay for them to get an MBA at night and you pour all this stuff into them and then just leave. You know, it's hard.

I get it. And you want to protect yourself. I know it's also business, like I said earlier, but, you know, it's a tricky one. So you want to at least have some protection in that contract, but they're not going to come after you.

There's also ways you can squeeze, you know, non-solicits in there. That's another provision of a contract. Oh, yeah. And that's different from a non-compete.

Yeah, explain those. Yeah. So a non-solicitation provision is don't steal our people. That's the general rule, right?

Or our clients. Yeah, or our clients. So it starts with the people and then it goes to the customers or the patients or the clients. So you cannot leave our employment and then go sucking our business out the door.

You cannot steal our staff. You cannot, you know, go after our customers. And those are, you know, a lot of times you can separate those from a non-compete. So even if there's a buyout and even if the non-compete has a certain amount of rules to it, the other doesn't.

And that's a little broader. So I'm always advising employers, be sure you put those in your contracts. You know, you want to protect your business as much as you can. Remember, the contract's whole point is to protect you and provide, you know, things in there that you can go after people for.

Another one is, you know, obviously compensation. You want to have compensation in a contract that is so clear and understandable when it comes to bonuses specifically, because it's not that people argue with their salary. It is what it is. You say it's a $200,000 salary.

Okay. But then there's this percentage-based bonus, and they're like, I thought it was a percentage of all the profits. You said now it's a percentage of this department, or I thought it meant this, and now you say this. Be specific in the agreement about what you mean by this bonus.

It's really important. That's a huge fight is, you know, they thought the bonus meant one thing and someone else said it didn't. But it also shouldn't be so complicated that you need a math degree. I mean, I've seen, you know, I jokingly said to a client the other day, I go, if I can't understand it, it needs to be rewritten.

Because if I look at contracts every day of my life and I think it's confusing, it's confusing. Yeah. No, it's an example to remedial. No, I like examples.

I think examples are helpful. I'm like, for example, if you get if this comes in, you get this much. I think that's actually clarifying. Some of them are complicated.

There's like a whole math formula with a numerator and denominator. There's all these subcategories. It's like that's where you get a little tricky. And so you have to be very clear.

Also, you know, that's where lawyers, especially in health care, can help because you don't want to promise a bonus that's actually illegal. Right. That's where start comes in. And you can't divvy profits up that way.

And, you know, you can't promise those things. So that is, of course, in a highly regulated field, those are important to get reviewed. But otherwise, you want to make the contract as understandable as possible. One other thing that might help your listeners that has come up recently for me, I had a client, new client, love them.

They're a pretty decent sized group. And they were including all of their benefits as an attachment to the contract. I was like, why in the world would you list all of your benefits? Those change over time.

They're like, yeah, we were told by some lawyer that we had to include them. I'm like, I'm going to give the exact opposite advice of that, which is you need a very, except for maybe PTO, which some high-level executives do negotiate if they're getting extra PTO and they want to put that in. And maybe just a mention that I'm going to be offered health insurance and life insurance. Okay, fine.

But generally speaking, you want to be very broad. And when you're talking about benefits, they are benefits that are offered to similarly situated employees. They are benefits that are generally offered in this company. They can change over time.

The company gets to make the determination of what benefits. Because can you imagine a You know, I mean, like, you promised me I don't have these vision benefits, and then I don't have this exact thing that's in this contract, and you're going, we had to terminate the plan for the whole company. And yet, it's stuck in a contract, and so you technically breached it, if you don't give those stupid vision benefits that you deleted three years ago. So it's really important not to hurt yourself.

And this was an employer that was doing that, and they really thought it was the right thing to do. So you need to be sure that you are smart with what you put in there, Because everything you put in there, you are going to be bound to, you know, so use caution. That's a really good point. Okay, I feel like you've sprinkled in a ton of things to do, things not to do.

Are there other mistakes that employers are making when drafting or enforcing agreements? Or on the flip side, are there other big things that you want to make sure they're thoughtful about? So I think a lot of times things change over time and they don't get amendments. They just say, you know, yeah, we're going to give them a raise and we think this bonus isn't really fair We're going to tweak it or you know what?

We're really not going to make them work three days a week We're going to push them to work for and they just kind of forget that they have to do contract amendments for those things That's really important So if you're going to change their schedule and their pay and their benefits or any of those things You need to go in there and do the work and make a contract amendment Right. That's really important. And it could be that you do need to clean some stuff up. I think sometimes employers are hesitant to, like, break open the box.

Like, I don't want to mess with it. You know, I'm afraid they're going to want to renegotiate. But it's not really a time to renegotiate the whole thing. It's just time to create an amendment.

Another thing to think about is after a while, your employees, if you're the employer, they're going to want to renegotiate their contracts. You know, it's sticky for both sides. If you work there and you're like, I have been working here for five years. I think some of these things are outdated.

I need more money, whatever. And that is tough because it can cause a lot of, again, emotions to run high. You don't really know how to go about that conversation. But I want you guys to think through, is it time for us to think about this?

You know, if you were an employee, what leverage do you have? You know, either side could just say, no, thank you. Not interested. We have a contract.

Continue forward. So sometimes employer you know has to know the risks if they're not ever going to renegotiate the contract you're going to face people putting in their notice you know and are you willing to take that risk and on the converse side if you're the employee sometimes you have to take that affirmative step and be willing to walk away if they're not going to make changes that are reasonable so it does get to that point and i want you guys to know that you don't have to get on the edge of the cliff, you can sometimes back it up and think, okay, look, again, look high level, think long term.

Is this a valuable employee that we really want to keep? Is this person that is an amazing asset to our organization? If so, then let's sit with them before they get to the cliff. Let's figure out a way to renegotiate while we're still on good terms, while we still like each other, you know, before it's a battle and before their lawyer gets involved.

And as the employer, You don't want all of your staff running around hiring lawyers because that's only going to hurt you. So you want to somewhat be reasonable and offer them some things. Also, a lot of companies say we want to standardize our contracts, right? We have employment agreements that are all over the map.

Some are robust. Others, we changed our template. You know, now we want everybody to be in the same one. I'm like, whew, that is not an easy thing to do.

You can't just go, hey, guys, on October 1st, everyone's going to get a new contract. You're going to get a lot of angry people. They're going to say, no, thanks. They're going to all, you know, lawyer up and all the things.

So how can you really that's that's like a change management function for you. Right. As how do you standardize these contracts in a way that doesn't look punitive? You know, how can you add something to them?

You know, in other words, can you give them an extra bonus or something to incentivize them to want to sign a new contract, you know, or make it better? This non-compete is perfect example we're going to update all the contracts because we want to make the non-competes comply with state law and then actually helps you guys and also we're going to give you a five thousand dollar bonus 80 of them will just sign it and but you can make you can make other tweaks and changes and clean the contract up and standardize all of them yeah you know and you have a couple holdouts but the point is you have to make it worthwhile to your staff otherwise they're going to go why are you doing this where are you making us sign new contracts What's in it for you?

You know, they're going to be very suspicious. So it's important to really have that trust in your organization that this is a cleanup effort. We're not trying to screw you over. Yeah.

Okay, question for like a professional organization's attorneys, accountants, physicians, where a lot of times there is an employment agreement or maybe an independent contractor agreement and then some sort of partnership agreement that is an umbrella over everything. What pieces should go in the partnership agreement versus their individual employment or independent contractor agreements? That's such a good question. Okay, well, let me back it up and say that many people get a job on the executive level with anticipation that they're going to get a partnership deal, right?

Like, I'm going to work for a certain number of years, and then I'm going to get a partnership offer. I'm going to be offered into the company. I always like to say on both sides, employer or employee, date before you get married. Do not just jump into this marriage, okay, without knowing what you're getting into.

Because you might find out quickly, I don't want to be a partner. I don't. Their overhead is insane. They never get actual distributions.

It's a $500,000 buy-in. You know, there's a lot of questions that come up. So first of all, I always suggest maybe you can work there for a year before you become partner. So then you move to partnership.

Let's say that you're like, this is fantastic. I'm going to be a partner in this group, and it's going to be a real good investment. When you get those partnership documents, it's the same analysis that you use for an employment agreement. How do you get out?

Do you get into this partnership and you dump $250,000 in for a buy-in? Then what's the price on the way out? You assume people, common sense, would tell you that, well, obviously you get in what you put out or more, but that's not always the case. And many times you might put in, you know, $200,000, and then the exit price is fair market value, but the company value is tanked.

Or it might be book value. Which is nothing. Or it might be, you know, rated on some table. I mean, I've seen about five different purchase price differences on the way out.

So it's on the way in and on the way out. What do you get on the way out? And also, how much notice do you have to give? Are you bound to a non-compete that's extra onerous?

You know, what are all the things that hit you on the way out? So those things you have to research. So it's not just like getting a job. It's investing all this money and owning something?

And how do you walk through that process? So that's why I think it's really important to sort of have a time period where you work for them first before you get the offer. But let's say that you're like, no, no, no, that's not me. I am 100% going to own this.

Okay, I'm going to be a 10% owner. This is amazing. Great. You go through the partnership documents, you hire a lawyer, which I recommend.

You are invested. Many, many times there are still two agreements. There's a partnership agreement and there is an employment agreement. That's very common.

And sometimes they have two different non-competes. And sometimes there's two different notice periods. There might be 90 days in your employment agreement, but there is a year in your partnership documents. Wow.

You know, and so these are things that you have to look at in tandem. And sometimes you have to make a checklist to say, if I leave, what happens? This is what says in the employment agreement. This is what it says in the partnership documents.

Sometimes when you become a partner, your employment agreement naturally gets terminated and you just have to deal with the partnership agreement. So it's kind of depends on the company. Some have still two documents. Some, many partners have no employment agreements because they're a partner and they don't think they need it.

They don't want to be bound by those rules. So then you, of course, have to go to the company agreement, which is the rules of the road for the company. And that's what dictates how much notice you give and do you have to practice and, you know, how many hours you have to work. A lot of that is in the partnership documents themselves.

So I think people do forget, you know, these are all things you have to read. And sometimes partners feel they have a lot more power than they do. And then you go and look at the company agreement, you're like, oh, it's just majority vote and I'm a 10 percent owner. So I make no decisions.

I have no say. Right. Very few things are unanimous in voting. So you're always going to be a minority.

So one of the things I look at when someone's buying in is you're going to be a minority owner. What rights can I squeeze into this that maybe you could keep? Are there any minority rights here? Or is there time that you could have a veto?

Or how are they going to kick you out? What if the majority just votes you out? Boom, simple majority, you gone. And you were like, what?

So these are things that you really want to process. And, you know, look, I'm not against AI. If you want to run this through AI to give you some thoughts, do it. I'm just saying when you're drafting documents and you're making edits, that's when you really want to get someone in here that knows what they're doing.

But regardless if you are negotiating your very first employment agreement or if you are experienced in going at this with 20, 30 years experience, you have to pick your battles. Yeah, you absolutely do. I mean, I can't tell you that the number of young green lawyers that just redline everything. And I get it.

And I'm like, oh, bless their heart. It's just so trivial. You know, the things like, oh, did we miss a comma? Is there a there as you want to add?

You know, word reasonable a thousand times. Like these things just aggravate the other side. Really, what you want to do is focus on the big stuff, you know. And also, I think that people forget, you know, you hear when you negotiate, there's all these games that people say they play.

Oh, well, you know, start high and end low, or, you know, start in low and make them, force them to do this, or, like, ask for everything, knowing you're going to get a little, like, okay, why? Why are we playing games? We all are in the same industry. Whatever industry you're in, you know, you've been in it for a while.

You need to go in there being very reasonable, but also it's all about you. Okay, you're an employee of a big company. It is not remotely about you. It's about them.

And so when you go in there and try to negotiate their contract, they're like, who do you think you are? You're a peon to us. I mean, not to be rude, you're lovely, but to the company, you're nothing. And so you want to go in in a negotiation if you're on the employee side and say this is what I can do for you Okay, this is how I can grow your business.

This is how I can make you the preeminent company of the land This is how I can elevate you and then only then once you've gotten that done Then you go there's just a few contract edits that I would like to talk about because by that point they want you so badly They're like yeah, okay. We might make an exception But you don't go in starting with all your edits and, you know, arguments. This is what I think you need to do better because you're so special. You're not special.

And on the employer side, the same way, it's like you want to make sure that the person coming to you is focused on growing your business and making you better and is exactly what you're looking for. And then you actually might decide to give in a little. Be like, I've had many employers that have come to me and they go, we never edit our contracts. But this guy?

Oh, man, this guy is the ticket. We've got to get him. So if he needs to change this, this and this, we'll do it. And I'm like, I've never heard them say that before.

Good job on the on the employer. I'm the employee for getting that done. But that's the secret sauce. It's all about leverage, you know.

And so if you can establish that leverage, then you're going to get somewhere. Yeah, absolutely. I have seen everything that you're talking about, and it is all spot on and really just makes the employer kind of laugh at you if you walk in with their entire contract redlined. Oh, man.

It just, and it also, I mean, I hate to say it because I want people to stand up for themselves. I give a lot of talks on, you know, finding your power and knowing your worth, but that doesn't mean redline your whole contract. You know, I think people confuse that. They're like, well, I'm standing up for myself.

I'm like, no, you just don't look like you know what you're doing, you know. And it makes you look like you're a problem from the beginning. And employers look at that and go, who do they think they are? We are not going to change all that for them.

So just you're not starting on the right foot. Now, if you have a lawyer, sometimes you can blame your lawyer and then you can sort of skirt out of it by saying, well, my lawyer, you know, what do you do? I'm I can do it. You know, that's totally fine.

You should always blame a lawyer. But, you know, oftentimes another thing I want to point out on both sides of the aisle, whether you're employer or employee, use lawyers strategically. OK, we do not need to be wearing our suits, barreling around, being ego driven maniacs. We need to be behind the scenes more than we are seen.

So if you are a company and you have a lawyer on speed dial, they they just help you write your emails. They help you guide you through strategy on terminating someone. They help work with you on writing your employment manual. They don't need to be the face of anything.

No one needs to know that they're helping. But that's when you start using, you know, really smart CPAs and financial advisors and lawyers. It's really a tool. We're just the same as IT department in some ways.

We're giving you tools to do your job better. And if you have a lawyer that can't do that, then find a different lawyer. That's great advice. Yeah.

Yeah. I had a situation recently, not really to an employment agreement, but a vendor. And me and the salespeople were just sputting heads and it was, we were going back and forth. And I finally suggested, I said, you know what?

I think the spirit of what we're trying to get to, we agree on. Why don't we get out of the way and just let the attorneys talk? We don't even need to be in the meeting. Like, let them figure out the language.

And their attorney wouldn't talk to our attorney. Oh, my goodness. And so I moved on. So, oh, that's a red flag.

Red flag. Red flags. Yes, for sure. So I was going with that.

I got distracted. But yeah, I feel like when the attorney jumps into the room, it should almost be peer-to-peer. Right. I don't want somebody's attorney bullying me.

No. And I don't want to talk to somebody else's attorney without my own representation. If we really need the attorneys involved, let them talk to each other. Let them talk to each other.

Also, you know, maybe try to leave the lawyers out of it. Yeah. You know, if you can't. I mean, I don't mean not use them.

heck yeah, use us. Just use us in the background. You know, I have a standing meeting with one company, and they call me every week, and they just go over a couple, it's not, it's like, 15, 20 minutes, but they have a, usually every week they have something they just want to run by me. It's a patient concern.

You know, should we terminate this patient? Should we be concerned about this? I have other people that call me just like, okay, we're going to, I had one client that said, we're going to fire someone and we're so nervous about it. We want you to fly across the state and sit here with us while we do it.

I'm like, wow, that's a, you are very nervous, but if that's what you want me to do, I'm happy to do it. You know, but it's like, but also you can do it yourself. I'm going to give you the script. I write a lot of scripts.

Like, this is what you say. This is how you do it. And they're like, it's that easy? I'm like, yes.

You know, so it's Amanda Hill, enabler of humans, enabler of humans to go do it. But that's to me, when you're a CEO. And you have a team around you that uplifts you and allows you to do the work. I mean, how special.

I love helping my business owners be business owners, which means they're not lawyers. They don't know a lot of the rules. That's OK. You know, sometimes they send the informed consent to me.

This is off topic of employment agreements, but just agreements in general. They have me review them and I'm laughing like, what did you think the point of this document was? You know, it's not a sales document. It's to inform people of the actual risks.

Same with employment agreements. I have people that think they're saving time and they will say, well, I took a first stab at this. And I'm like, oh, that's always scary, you know. And I say, you know, it's probably better if you just let us use our templates because they're all pretty good.

And they're like, OK, we were just, you know, trying to help. And it's hard. I don't fault anybody for trying to run something through AI or pull something off Google or use something from their last job. That's called life.

Yeah. You know, you just need to be smart enough to know how do I get this cleaned up? You know, get an audit. Have someone come in and look under your rocks and say, do you have the right insurance?

Are your employment agreements solid? You know, do you have a compliance plan in your organization that is functional? All the things that you need, you just have to understand what you don't know. And you get help to shore them up.

And contracts are a really important one. And I have had very sophisticated clients that are smart people. This is not that people are dumb, okay? It's just not your specialty that have said, we've used this contract forever and it works just fine.

And then I point out a fundamental flaw and they're like, we never, ever saw that coming. We did not know that was in there. It's like, well... You know just getting a second pair of eyes on it sometimes helps or things get missing one time i wrote a contract for a client and they decided well we don't need to go back to amanda we'll just use this template and just keep editing ourselves and they they just contorted the thing into something that was terrible at the end because they just kept changing it and editing and adding footnotes i was like are there footnotes in this thing like what is happening so if you're going to have a lawyers help you you know don't just take what they give you one time and then morph it to something unrecognizable.

You know, you still want to keep working with your lawyer to make sure that you don't screw it up because then I had to clean up a big mess. So if you're changing more than name or date, call your attorney. That's right. But, you know, one of the things, Amanda, that I say is I don't want anyone to be codependent on lawyers.

We have our role. We're always going to be here. What I want you to do is be smart. You know, pull in legal counsel when you need it or an employment lawyer or whatever, you know, when you need it.

And then they exit the stage and you continue to run your business, right? We're not running it. You are. And I want you to feel like you have the tools to do so.

Yeah, absolutely. Gosh, Amanda, I could talk to you all day, but I know we are getting near on time. So if you could give just one last piece of advice to people, specifically employers, HR leaders on their employment agreements, what would it be? I would say, and this is a little bit broader, but I'm a big, broad thinker.

Don't burn bridges. Oh, yes. Drum roll. I mean, it's so true.

On both Both sides. You know, do not go and ruin someone's life because they didn't work out in your job. Let them go. And if you're on the employee side and you're working at a toxic job, thank that job for giving you the best lesson you've ever learned.

And you walk away with your head held high. Do not go out any job on either side in a blaze of glory. People remember the first and the last of everything. And they're going to remember that, You know, you being a horrible, reactionary, overly dramatic person at the end, even if you're right, it doesn't matter.

I think that's a big lesson that I've learned a hard way in my own life is just it's not worth it. Always hold your head high and just walk away. Yes, that's incredible advice. Well, Amanda, thank you for your time.

Thank you for your passion for your work. And we just really appreciate you. You're welcome. It was fun.

big thanks to Amanda Hill for helping us better understand employment agreements non-competes and how employers can approach them thoughtfully in a changing environment this is the generous benefits podcast where we keep it practical personal and people first so.