Should you be using Employment Agreements?

The self-storage industry is constantly evolving, and we have recently seen a number of operational changes which have greatly benefited operators of all facility sizes. While it may not come immediately to mind when thinking about changes in the industry, one of the areas that has been impacted is the relationship between operators and their employees and the growing need for the use of employment agreements.

Many industries have found success in a variety of different areas by using employment agreements. A study conducted in 2019 showed that almost half of private businesses in the country implement employment agreements. The use of an employment agreement is a successful way to define the expectations of the job. Employment agreements allow both parties the opportunity to clarify their roles and responsibilities in the operation of the business. In self- storage, an employment agreement will set out the specific duties of the self-storage manager. It is this list (which might duplicate the information in the written job description) that creates the basis for measuring the manager’s job performance.

In addition to listing job duties, employment agreements also outline the benefits provided to the employee for proper job performance. Separate from an explanation of the compensation to be paid and incentives relating to bonuses, employment agreements can be used to set out other employment benefits such as health insurance and vacations. Moreover, the use of employment agreements is a great method for limiting (and even governing) employment disputes during the employment relationship. Employment agreements should include whatever information is necessary to record the understanding of the parties in order to avoid future disputes over the employee’s duties, compensation, and benefits.

All employment agreements should include an affirmative statement that the agreement does not constitute an employment contract and that the employment relationship remains AT WILL, terminable by either party with or without cause. Where termination is explained in the agreement, the agreement should also include a provision for dealing with the rights to recover company property at the end of the employment.

When it comes to the issue of potential competition from past employees, updated employment agreements should address the issues of non-competition restrictions and non-disclosure limitations. Non-compete clauses (or separate non-compete agreements) should prevent employees from working for a competing employer within a certain geographical area and within a certain time limitation. Non-compete clauses can help operators retain good employees and protect proprietary or confidential information from getting into competitor’s hands. However, non-compete clauses must be drafted in a specific way in order to be enforceable. Non- disclosure provisions (or separate non-disclosure agreements) should prevent the sharing of confidential information, such as pricing, space, rental and leasing information, customer lists, financial information, management and/or financial reports (computer-generated or otherwise) and other proprietary information the manager may have learned while employed. Thus, an employee who signs an agreement with a non-compete and non-disclosure provision should provide greater protection for operators when managers leave to join forces with a local competitor.

Ashley Oblinger is an attorney in the law firm of Weissmann Zucker Euster Morochnik & Garber P.C. in Atlanta, Georgia. Ashley specializes in business law and self-storage law, advising self storage facilities throughout the country on all legal matters, including lease preparation, lien enforcement, tenant issues, tenant claims defense, and employment policies. Ashley can be reached at 404-760-7434 or at Ashley@wzlegal.com.

This article was originally published by J.Ashley Oblinger, October 2021