Should You Have An Employment Contract?

Periodically, there seems to be quite a bit of turnover in the chamber world and it seems like we are going through one of those periods now in my state. Each of those separations are unique, but it always brings up the discussion of whether or not the chief staff executive should have an employment contract or not. Many states, like Maine, at at-will employment states meaning that working for an organization is voluntary and you can quit at any time. It also means that your employer can part ways with you at any time and for any reason (as long as the reason is not illegal). Certainly, there are pros and cons to having an employment contract and that will be up to your particular situation, but if you choose to have an employment contract, here are some things to think about:

1. The contract should have specifics regarding the position duties including fundraising responsibilities, staff management, financial management, lobbying and membership. Do you report to the full board, executive committee or board chair? Try to avoid vague references that point to the association’s bylaws or strategic plan.
2. The length of term of the contract and how the renewal process is handled. Three-year contracts are common, but some are longer term. Sometimes the term is related to whether or not the person is relocating to the area. Picking up and moving your family to a new home is often a good reason to seek the security of a contract (and perhaps relocation assistance).
3. Of course, the contract should detail the compensation structure, bonuses and benefits, but it should also detail performance reviews and how they are handled.
4. One area that often gets overlooked is how business expenses and perquisites are handled. Is travel to meetings fully reimbursed? What about club memberships? The contract should detail these specifics.
5. However, the most difficult section is detailing the separation agreement. Neither party wants to think about that day when it might be time to leave, but it is important to give this section some careful thought. If there is a termination, what is considered with or without cause? Severance arrangements sometimes detail a week or a month for each year of service. If the CEO and board can’t reach an agreement on a renewal or a parting of the ways, should you consider an arbitration agreement?

Remember, an employment contract is not a one-way street. It is a tool to help attract strong talent to the position and provide security and assurances to both parties. Lastly, with any legal contract you should seek advice from a trained legal advisor. Your chamber or association would expect you to have it reviewed and there are frequently variances in state and local laws. In some cases, your chamber or association would expect you to draft the document so starting from firm legal ground is important.