What Is a Company Gear Agreement?
A Company Equipment Agreement is a legal document that outlines the terms and conditions under which a business (the "Employer") provides its employees, contractors, or other acts (each, referred to a "Representative") with access to and use of the Employer’s equipment, computers, software, hardware , and/or other resources. The purpose of the Company’s Agreement is to designate the use and maintenance of these resources and reduce the risk of liability. Company Equipment Agreements can also be used as a method to protect an Employer’s confidential information from access by former representatives. A representative should never take possession of a Company’s equipment until they have signed an agreement.
A Company Agreement is typically signed at the beginning of employment and then updated when the Representative is assigned new Company equipment but can also be drafted as a list of rules and regulations that are agreed to by either all of a Company’s Representatives or limited to a specific group of Representatives.
Components of a Gear Agreement
A comprehensive equipment agreement should address various key components to ensure that all parties are protected and that there is a mutual understanding as to how the company-owned property can be used and what should happen in the event of termination of one’s employment, for example. A sample list of issues that should be addressed in the agreement is as follows: Ownership. It should be clear that the company maintains ownership of the equipment, all rights pertaining to ownership, and the discretion to dispose of the equipment. Use. For example, the agreement may stipulate that the equipment should be used for official company business only, or that it may not be used for non-work purposes or on social media. The parties should also consider whether the employee must obtain consent before using the equipment outside of work hours, when traveling, by family members, or when circumstances require the equipment to be taken home. Maintenance. The employee should agree to maintain the equipment in good condition, and the agreement may provide guidance for maintenance responsibilities, collections, delivery, and preventative maintenance. Security. The company should have the right to take possession of the equipment at any time for any reason, and should provide for reasonable methods of collection if the equipment must be recovered. Return. The employee should be required to return the equipment in like new condition upon termination of employment. In the event that the employee fails to do so, the company may deduct the cost of repair and/or replacement from his or her final paycheck or any other outstanding amounts owed to the employee. Additionally, the agreement should clearly state the consequences for failure to comply with its terms.
Benefits to Gear Agreements
Awareness of the above-noted issues and implementation of an equipment agreement can offer significant benefits to employers and employees and protect against unexpected losses. From an employer’s perspective, such agreements will re-enforce company property ownership and customize your internal company policies, thus preventing potential liability from personal use or even theft of devices. Use of an equipment agreement will also make it clear to the employee what is required of them when they receive equipment and should help enforce the obligation to promptly return the equipment if there is a resignation or termination. For employees, the implementation of an equipment agreement is often helpful to set the "rules of the road" and manage expectations in the future, especially when it comes to employer-reimbursements and employer rights to inspect or monitor the equipment. Having the employer’s expectations in writing can help prevent or limit "misunderstandings" and can provide the employee a useful document to reference in the future if an issue arises. This is particularly true in the context of termination-related disputes, where equipment agreements can be beneficial to substantiate the scope of employee obligations and minimize or eliminate damages.
Common Provisions within Gear Agreements
Although the terms of equipment agreements vary, there are a number of provisions that commonly appear in these agreements. The following are examples of such terms:
Repair Obligations
Equipment agreements frequently contain a statement of the obligation of the employee to protect and safeguard the equipment. Common formulations require the employee to "care for, protect, safeguard, and maintain" Company equipment while the employee is employing that equipment. There may be a list of actions that the employee must take to protect and safeguard Company equipment, such as: Upon termination of employment, the employee almost always must immediately return Company equipment, and return it in the same condition as received (subject to ordinary wear and tear). Again, the parties should expressly set forth the equipment to be returned, and requirements for returning it.
Liability
There are usually provisions that require the employee to be financially responsible for damage to the equipment. For example, the employee may agree to replace lost or damaged equipment (or pay the cost of repair), and/or be responsible for fair market value of the equipment upon termination of employment. In connection with liability, equipment agreements may contain terms with respect to employer payment of ongoing expenses incurred by employees in connection with the use of the equipment. For example, the employer may agree to pay for expenses for cell phone use, Internet service, and computer/software maintenance.
Company Ownership of Equipment
Company ownership of equipment is generally prominently stated in the equipment agreement. The Company may reserve the right to determine whether Company equipment will be used at the workplace or the employee’s home. The Company may impose restrictions on use of equipment outside the workplace or home.
Return of Equipment
Some agreements expressly provide for Company access to check on, modify, or retrieve information or data from Company equipment. In one instance, an employee received his personal copy of a CD after it had been removed from his work computer, but before it was removed from the Company’s network. In that case, the employee sought to keep the personal copy of the CD, but the court found that under the equipment agreement, the Company retained ownership of software and the right to monitor and restrict the employee’s ability to copy and conceal software.
Best Practices in Gear Agreements
Best Practice Tips for Drafting Company Equipment Agreements
For your company’s equipment agreements to be effective and legally enforceable, you will need to follow a few basic best practices when drafting them.
Keep It Simple.
The best way to start off a strong equipment agreement is to make it readable and easy to understand. You should avoid the use of confusing and complicated legal jargon whenever possible. While it might seem like the document needs to be full of legal terms in order to be enforceable, the opposite is often true—overly verbose equipment agreements are more difficult for employees to read and therefore often not as clear as they should be.
Be Comprehensive.
Whenever possible, try to predict what kind of issues or questions might arise from your equipment agreements, and address them directly in the document itself. For example:
• Include procedures for individuals to follow if they believe they have been improperly accused of abusing or damaging company property.
o Your employees should be clear on how to report any damage or malfunction of equipment as soon as they notice it , even if they are not responsible for causing the damage.
• Include specific provisions that address additional items that may be located in other areas of the company’s documents, i.e., your employee handbook.
o You might even consider including a provision in your employee handbook about company equipment as an easy way to promote the idea of accountability for both employer and employee.
Be Specific.
To make your equipment agreements as comprehensive and effective as possible, make sure you include specific details such as:
• Who is considered the owner of the equipment, and what types of equipment they are permitted to take home.
• Whether employees will be allowed to repair damaged equipment, or if they will be required to notify a manager or another individual within the company.
• When employees will be required to return damaged or broken equipment to the company.
• Terms of use—including pro-rated or full repayment for lost, stolen, damaged or broken equipment after a certain period of time.
• The process the company will take in order to address any alleged damage or equipment loss by company employees.
• Important definitions regarding terminology used throughout the document.
Legal Implications for Gear Agreements
As companies consider the legal terms that should be contained in an equipment agreement, there are a number of considerations. First, as noted above, an employer’s ownership of equipment is not satisfied just because it has an employee sign a document that he or she agrees that the equipment belongs to the employer. That document must include terms that are consistent with the ownership rights of the legal owners of the equipment. If the employer has entered into a lease agreement for equipment, then it needs to make sure it is not inadvertently violating the lease by authorizing an employee to take that equipment home.
Second, there should be terms in the agreement that make clear to the employee that he or she has no rights to the equipment, or to modify it, once the lease term expires. Employers that do not property reflect its ownership interests in the equipment run the risk that the employee will try to assert a claim of ownership to it that was acquired while employed. Further, while nothing prevents an employer from allowing an employee to modify that equipment while it is leased, doing so does not give the employee ownership rights after the lease term expires. The employer should take steps to ensure that the independent contractor also knows that any modifications cannot be sold and/or returned to the employee upon termination.
Third, companies should make clear to employees in its handbook that the company owns all equipment, including those that are taken off the company premises. This could further help defeat any claims that the employee may try to make to the contrary.
Dispute and Breach Control
Disputes or breaches in connection with equipment agreements can be handled with note of the circumstances, and resolution promoted through the use of mediation. If necessary, a party may seek a temporary restraining order or injunctive relief to secure the property or resolve a default or dispute. A company can protect itself and put the other party on notice of a dispute by sending a letter which only sends a copy to the other party’s employer to confirm the dispute and gives a reasonable time in which to respond. The letter should confirm the other party’s notice of the policy and perhaps give a sample policy. It can be combined with requesting the property.
Future Gear Management Considerations
As remote working becomes more prevalent and the amount of company-issued equipment grows, we expect to see increased digital tracking of the inventory of equipment granted to employees. As many workers access company systems remotely, there may be more restrictions on bringing company-owned technology home with a particular emphasis on malware and hacking related to personal information.
We also predict that the rise in the remote workforce will require terms and conditions in connection with remote working that address the employees’ responsibility for their belongings. Employers may implement policies that require workers to take reasonable steps to safeguard their passwords , devices, and virtual data from potential breaches and other related liability.
Long before employees are required to make these assurances, however, new employer/employee relationships will be made clear through the negotiated terms of the agreements.