Employee Contracts, Schedule Changes for Summer, and Severance Pay

Welcome back to another edition of HR Basecamp Roundup! This week, we tackle some interesting and common issues that come up in workplaces more often than you think. If you haven’t joined our HR Basecamp Facebook group yet, be sure to join so you can participate in these discussions in real time! 

Podcasts and Resources in this Roundup:

• Episode 97: The Two-Way Street of At-Will Employment

• Wage Whispers: Can I Stop Employees Discussing Pay? 

• Supporting Employees in Balancing Childcare and Work Schedules

1. What should I include in employee contracts?

Question: I’m working on refreshing my employee contracts. I already include that their pay and benefits are confidential and that they have a non-compete if they leave. What else should I include?

The Legal Side: Let’s start with a reality check: For most roles, you probably shouldn’t be using “contracts” at all. That label can create legal risks and unnecessary confusion if misapplied.

Here’s what you need to know:

• Confidentiality Around Pay Is Illegal – the National Labor Relations Act (NLRA) protects employees’ rights to discuss wages, benefits, and working conditions. Only pretty high-level roles in your business can be excepted from this. Including a pay confidentiality clause—even indirectly—violates federal law and opens you up to serious liability. If your contract includes this, you’ve just handed opposing counsel both a demand letter and a reason to file a complaint with the National Labor Relations Board (NLRB).
• Non-Competes Are a Legal Minefield – more and more states are banning or severely limiting the use of non-compete clauses. At the federal level, changes are underway as well. Even in states where they are legal, they are typically only enforceable when it’s a high level manager or provider. If you still want one, don’t write it yourself. Consult with a qualified HR professional or employment attorney who understands both your state laws and recent federal developments.
• Calling It a “Contract” Could Cost You – the word “contract” sounds official, but it can accidentally signal guaranteed employment. That can override at-will status, making terminations more difficult and increasing your exposure to wrongful termination claims. Unless you’re hiring for an executive or highly specialized role, use an offer letter instead.
• Right Tool, Right Use – at CEDR, we recommend:
  • Employee Handbooks – For setting clear policies and expectations
  • Offer Letters – For confirming terms of employment (not binding commitments)
  • Contracts – Only for rare, high-level roles with special terms

Each of these must be used under the right conditions, with careful language to stay compliant with both state and federal law.

The Human Side: If you’ve already issued contracts to current employees—and especially if those contracts contain red flags like pay secrecy or a non-compete—it’s time to address it.

But don’t do it alone. In order to rescind or revise these agreements, you need to speak with an HR professional who understands the issue. In some cases, you may also need to loop in an attorney—especially if there’s a risk that your team could discover that something was legally off in the original documents.

This process is about protecting your business and reducing future risk, not enforcing outdated or noncompliant terms.

A well-crafted offer letter, backed by a compliant employee handbook, gives you everything you need to establish clear expectations—without putting your business in legal jeopardy.

If you’re a CEDR Member: Reach out to the Solution Center. We’ll help you evaluate and safely replace outdated agreements, giving you documents that support your practice—not put it at risk.

Extra Credit Reading: Wage Whispers: Can I Stop Employees Discussing Pay?

2. Do I have to adjust the schedule for parents during summer break?

Question: With summer around the corner, several employees who have children have asked if they can adjust their hours to coordinate with their summertime childcare. I would if I could, but their requests don’t work with our normal business hours. Plus, I don’t think this is fair to other employees. Is it okay to deny their request?

The Legal Side: You’re not legally required to adjust work hours just because school is out—unless there’s a state law that specifically grants time off for school-related activities or closures. A few states have laws requiring employers to allow leave (often unpaid) for certain school events or emergencies, but these typically don’t cover routine summer break. Still, it’s a good idea to check your local laws just in case.

Otherwise, as long as you’re applying your scheduling policies consistently and without discrimination (say, denying all personal schedule change requests that conflict with business needs, not just those from parents), you’re generally in the clear legally.

The Human Side: We get it—summer hits and suddenly everyone’s juggling camps, babysitters, and that one week when Grandma’s “totally free to help” turns into a last-minute vacation. But flexibility, when possible, can be a massive morale booster and a retention win. Even if you can’t accommodate every request, employees will notice if you try. Plus, there’s always the chance that denying the request will lead to increased absences or tardiness. Will last-minute attendance issues have a harsher impact on the day-to-day of your office than their request will? 

That said, fairness counts. If adjusted hours for a few would overload the rest or compromise customer service, it’s okay to say no. Just explain the why clearly, and see if there are any creative options—maybe a temporary shift swap system, or partial flexibility on certain days. Showing that you considered their needs (even if the answer’s no) goes a long way in keeping folks engaged.

Extra Credit Reading: Supporting Employees in Balancing Childcare and Work Schedules

3. How do severance pay and pay in lieu of notice impact unemployment benefits?

Question: I let an employee go a couple of months ago and provided 4 weeks of severance pay so I wouldn’t have to pay unemployment. I just received notice that the employee applied for unemployment benefits. Can I do anything to stop this?

The legal side: In short: nope. There’s no way to block someone from applying for unemployment benefits—and under federal law, employees can’t even waive that right, even if they wanted to. And whether or not they receive benefits is a decision made by the state’s unemployment board, not you.

If you were on the phone with us here at the CEDR Solution Center, we would ask some follow up questions about the details of the” severance pay.”  It’s common for employers to confuse severance with pay in lieu of notice, but there’s a critical distinction to be made:

• Severance pay is tied to a signed agreement in which the employee receives money in exchange for waiving certain legal claims. It doesn’t prevent unemployment, though it may delay when benefits begin. Note: Severance agreements should always be drafted or reviewed by legal counsel to make sure they’re legally enforceable and aligned with your actual goals. 
• Pay in lieu of notice, on the other hand, is treated like regular wages. It’s given as a courtesy when separating with an employee, but there aren’t any agreements or waivers attached to it. This kind of pay can also temporarily delay unemployment eligibility because it’s considered payment for time the employee would have otherwise worked.

It’s important that you understand the difference between the two, but regardless of which type you issued, it won’t stop the claim—it may just affect the timing. 

Typically unemployment benefits, if awarded, will not begin until the former employee has stopped receiving any pay from you. So if you gave them four weeks of severance, or a couple weeks of pay in lieu of notice, they won’t become eligible until after those payments end 

The human side:  From a legal standpoint, you can’t actually do anything to stop the employee’s unemployment claim. From an HR standpoint, we generally don’t recommend spending too much time and energy fighting an unemployment claim.

Unless you’re dealing with a clear case of misconduct, your best bet is to respond to any requests from the state with honest, timely documentation and move on. Focus your energy where it really counts: running your business and supporting your team.

Even if the state approves your former employee’s benefits, the money doesn’t come directly out of your pocket. Your unemployment tax rate might adjust over time, but fighting a claim doesn’t necessarily save you money—and it definitely eats up your time.