Decades ago, most people had no idea employment contracts or agreements existed. Just about the only ones who used these agreements were large corporations with many executive-level positions.
In the 21st century, employment contracts are much more common, but you probably do not need one for each employee. That said, several situations benefit from a well-drafted employment contract.
If you hire someone with specialized skills for a critical role in your company, an employment agreement is not only wise but necessary. You want to hold on to high-value staff members, and a contract is an effective way to lock them in for a term. In exchange for their services, you can offer them bonuses or incentives in the agreement.
Most of your staff probably do not have access to your confidential information, but some likely know much. How can you ensure such employees will not divulge your trade secrets when they exit the business? An employment agreement containing a confidentiality or a non-disclosure clause (for during and after employment) prevents them from sharing this information with other parties.
A possible disadvantage
When both parties sign an employment agreement, it binds them to its terms. That means that both of you must avoid violating or breaching the contract. For example, if the employee is not meeting your expectations, you could be stuck with them for a while (or negotiate new terms).
Professional contract counsel
Business and contract laws are more complicated than they were in previous eras. The terms of a contract guide nearly every step you take as a California company owner. Make sure all your agreements are airtight by seeking guidance from a legal professional.