Employment Contracts: Good for Nothing

This blog is by Rob, President and Co-Founder of Junction Networks. Warning: You may experience laughter and, in the event that you are a lawyer, some annoyance. We assure you, however, that we appreciate our attorneys and may just have to send them a fruit basket because of this blog.

I get teased quite a bit about my admiration for 37signals. I regularly remind my team of what 37signals is doing or how “they” are approaching an issue or opportunity. Recently, I came across a 37signals blog, Employment Contracts: What Are They Good For?

“One of the things we’re beginning to question are employment contracts. When a new employee starts at 37signals we make them sign an employment contract. The contract was drawn up by our lawyers a few years back, so there are no incremental costs each time we bring on a new employee, but is that good enough reason to keep this inertia going?” says Jason Fried.

I am glad to see Jason F considering the idea of eliminating employment contracts. We have never had them, although our attorneys are not thrilled about it.

We see them as a complete cover-your-ass attempt; although, I’ve had many qualified attorneys tell me nothing in them can be upheld unless actual criminal laws have been broken by the employee. And in that case, the law would be on your side and the contract is yet again, a waste.

My take on employment contracts is that they strain relationships between employers and employees right off the bat, which is pretty stupid.

Essentially, this is how they read to me:

Dear New Employee:

Congratulation’s on your new position here at We Don’t Like or Trust You, Inc. We are excited about your opportunities here. Your salary and benefits are as follows:

- Your salary is:
- Your vacation days are:
- Your title is:

Welcome aboard!

Oh, just a few more minor items:

You are an at-will employee and can be fired for any reason at any time without notice or warning. BEWARE. We know this was obvious when you took the job without any term or guarantee, but our lawyers would like it formalized in writing so they can waive this contract in front of a judge and laugh at you should we end up in court.

During work hours, you will devote your entire attention and effort to your assigned role at the company. If not, we may fire you. Yes, this was covered with the “at-will” stuff above, but again, we don’t want any misunderstandings. (In case you do not fully understand that your pay is for work, not other stuff like sleeping all day, playing video games for hours, whatever.)

Sick days are to be taken on days when you are sick.

Vacation days are not for when you are sick, but rather, for vacation.

You are not allowed to steal things from us. It’s against the law in the United States, and you will be arrested if you steal. But, we just wanted to remind you that we don’t allow it either. If you do steal, we will call the police and have you arrested. That may be obvious, as you are living in the United States, but we have you pegged as a potential thief, so we wanted to call out this particular criminal behavior as a No-No.

You can’t compete with us. Your role here is insignificant in the scheme of things, and you currently couldn’t do much to harm us. However, we have added a non-compete clause here because we are worried you may be successful at our company, contribute more than we expect, and then consider leaving because we are not paying you enough to stay. In that case, having this non-compete clause, which we know is impossible to enforce, may scare the **** out of you, to the point that you feel you must stay here or just leave our industry altogether.

Sign here (Ink or Blood): ____________________________________