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Kevin O'Flaherty

In this article, we’ll discuss some of the most important clauses that Iowa businesses should include in their employment contracts and independent contractor agreements. We’ll cover non-compete clauses, trade secret clauses, non-solicitation clauses, non-disparagement clauses and a host of other important items to include in your employment contracts and IC agreements. We’ll also go over some of the common, but every important clauses that should be in every contract no matter the business.

The point of these contracts is to protect your business from legal issues, establish clear roles and responsibilities on both sides, outline the services to be performed by the employee or independent contractor, and to create trust and transparency between the business and it’s workers. Every industry in Iowa will have its own expectations and guidelines, but below you’ll find clauses that should be included in nearly every contract regardless of the industry.

Non-Compete Clauses In Iowa Employee and Independent Contractor Contracts

Non-Compete Clauses in Iowa prevent an employee from working for another business during employment and after employment has ended. Typically, these clauses include a reasonable geographic area and time-frame in which the clause is enforceable. Non-compete clauses are only coverable for a similar type of work and if the original company still has a presence in the area.

For example, if Joe was employed by Bob’s Dental office and his contract included a non-compete clause of 10 miles for 5 years then Bob’s office should assume it is safe from patient’s leaving the office and following Joe. But, if Bob’s office moves or goes out of business within 2 years, the terms of the contract become null or change, possibly allowing Joe to resume business in the previous location. Non-compete clauses are pretty clear cut for employees but the enforceability for a non-compete against an independent contractor can be ambiguous.

If detailed in the contract and signed by the independent contractor the non-compete could be considered legally binding. However, a note to independent contractors, you should be wary of any employer who tries to include a non-compete clause in the IC agreement as this blurs the lines between being an employee and an independent contractor.

Non-Solicitation Clauses In Iowa Employee and Independent Contractor Contracts

Non-solicitation clauses prevent an employee or independent contractor from trying to “steal” clients, patients, employees, etc from your business after their employment has ended. Non-solicitation clauses don’t have to follow the same geographic limitations as non-competes, but they will typically still have a time-frame included in the clause.

Trade Secret Clauses and Confidentiality Clauses In Iowa Employee and Independent Contractor Contracts

Trade secret and confidentiality clauses prevent an employee from sharing any sensitive or business related data including, marketing strategies, customer information, business systems, business operations, medical or technological information, etc. This clause would be in effect during and after the employee or independent contractors time with the company.

Non-Disparagement Clause for Iowa Employees and Independent Contractors

A non-disparagement clause prevents an employee or independent contractor from saying or posting anything negative about your company. These clauses can be legally tough to enforce but are often the reason for companies firing an employee who posts something inflammatory on the internet.

Other Common But Important Clauses To Include

Statement of Relationship

This section should include a clear and concise description of the employees or independent contractors working relationship with the business. It should also clearly define whether the worker is an employee or an independent contractor.

Project Description

This clause mostly concerns independent contractors. Here you would detail the scope of the project, expectations and potential times, specific deliverables you intend for the contractor to meet, and contingency plans should the work not proceed as anticipated.

Payment and Billing Terms

This section should be straightforward for employees, detailing hourly rate or salaried and bonus structure if applicable. For independent contractors, this section should include at what point during the project payment or a portion of the payment will be made. It may also include reimbursement guidelines.

Termination Conditions

This is a very important clause and should be very clear and descriptive. This clause will outline the rights of both parties to terminate the contract. Typically, reasons will include breach of contract, which covers all the items written in the contract, but also may include nonpayment, failure to meet a certain deadline, etc. To remove any ambiguities you could include language stating that the contract may be terminated by either party without cause, providing a three day notice of termination, or with cause, immediately upon the material breach of the contract.

When it comes to your business it does not pay to cut costs and risk making a mistake on your employment contracts or independent contractor agreements. Having a qualified attorney review a draft of your contract before giving it to potential workers is the safest move. For more information or to speak with one of our attorneys call 630-324-6666.

Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.


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