Employment contracts allow an individual or company (“employer”) to make an agreement to pay an employee, independent contractor, or subcontractor for services provided. It is recommended to include other items in the agreement such as the title of the individual, benefits, vacation time, personal leave, confidentiality, and any non-compete language.
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
At-Will Employment Agreement – Allows for the employer or employee to terminate their working condition without reason (“cause”).
Employment Separation Agreement – Signed when an employee is terminated or leaves employment. Releases both employee and employer from any wrongdoing.
Employee Termination Notice – Letter to the employee that describes the reasons for their termination.
Independent Contractor Agreements – Contract for services between a client and an independent contractor. Payment is for the service only. All individuals that work on the job will be under the employment of the independent contractor.
Non-Disclosure Agreements (NDA) – Prohibits an employee from releasing confidential information about a business’s practices.
Non-Compete Agreements – Prevents an individual from being employed by a competitor or continuing work in the same industry if their employment is terminated.
Subcontractor Agreements – Contract for services between an independent contractor and the subcontractor.
Table of Contents
- Employment Contracts: By State
- Employment Contracts: By Type
- Employment Contracts: Sample Template
- How to Hire an Employee
- W-2 Employee vs Independent Contractor
- Breaching an Employment Agreement
- Terminating an Employment Agreement
- Moonlighting Clause
- Indemnification Clause
- Minimum Wage ($ / Hour)
- How to Write an Employment Agreement
At-Will vs Non At-Will
At-will employment allows for the employee to terminate their position and/or for the employer to terminate them with no reason or “cause”.
Non-at-will employment is when the employer has guaranteed the job for the individual for a specific time period or on a per-job basis. The employer may not terminate the employee unless they violate the contract.
When hiring an employee to fill a position, it is best to know exactly the skills and the traits that are needed in order to place an ad that gets the most qualified candidates. The hiring process also depends on the State as there are certain laws on what can or cannot be counted against the potential employee when considering employment.
Step 1 – Figure the Pay and Position
Once an employer has figured that there is a need for a position within the company they should decide:
- The individual’s role;
- Number (#) of hours to work per week;
- Pay (salary);
- Benefits; and
- Time-off (vacations, holidays, personal leave, etc.)
What to Offer for Salary? – The most important figure to candidates will be the pay (salary). Find out how much specific professionals are being paid in your area by using websites such as PayScale.com, Glassdoor.com, and Indeed.com. This will allow the employer to understand the “going rate” for the profession in their market.
Step 2 – Place a Job Listing
Depending on the employment position, it is best to make an ad that details exactly what is expected of the individual as well as what skills will be needed for the available position.
It is best to place the job listing either in a local newspaper or on one (1) of the following websites:
- Indeed.com – The largest website for job openings.
- Craigslist.org – The oldest site for job listings. Great for supplemental, low-level, or part-time work.
- Glassdoor.com – Allows employees to post reviews about employers.
- Betterteam.com – Make 1 posting on this site and it will distribute to the top 100+ job sites.
Step 3 – Review Candidates’ Applications
Get ready for your inbox to be overloaded with resumés. For general labor positions, the first individuals to apply will probably be the ones to get the job. For more skilled professions, it will be easy to filter the applications just by reviewing the candidate’s past work experience.
Step 4 – Start the Interview Process
Now it’s time to begin setting up interviews and getting to know the person behind the resumé. The employer will need to prep their interview questions and be able to formulate a conversation that will determine if the candidate will be a good fit for the company.
In addition, seeing the candidate’s enthusiasm for the industry and the company is a good test when finding out if the person truly has an interest in the industry. This will also help in filtering out employees that will be moonlighting, also known as working for two (2) jobs at once. This is an issue especially for employers that work in remote locations.
Step 5 – Verify the Resumé
According to HireRight.com’s Study in 2018 an estimated 85% of candidates lie on their resumé when applying for a job. Therefore, it is important and doesn’t take that long, to verify past employment, references, and the education of an individual. Especially since there are thousands of dollars at stake and the cost of hiring someone may be more liable than the money spent on their salary.
Therefore, it is highly recommended to verify that the individual is who they claim to be at the start of the hiring process.
Step 6 – Prepare an Offer Letter
Once the candidate has been selected by the employer, it’s now time to entertain their needs by submitting a job offer letter to them. This will outline the payment structure (usually salary or $/HR), benefits, time-off, and any other terms or company policy that should be mentioned.
A job offer letter is non-binding even when signed by both parties. It is just an outline for an agreement.
Step 7 – Perform a Background Check
It is necessary to conduct a background check on every one that is hired in a company. Not just for the safety of the clients and customers but also for the other employees that work for the company.
Use the following services to conduct a criminal background check:
Step 8 – Complete and Sign the Employment Agreement
After the background check is clean the employee should be called in to negotiate the terms of their employment. Typically, this is best done in-person as the individual will be able to detail their wants and needs and an agreement can be signed soon after. After the agreement has been signed, the employee will be required to present themselves on the first (1st) day of employment and the agreement will continue unless terminated by either of the parties, if at-will, or at the end of the term, if fixed period.
Depending on the type of the service and payment, the Internal Revenue Service (IRS) may class an individual as either a W-2 Employee or a 1099 Independent Contractor depending on the services they provide and how they are paid.
- Is paid for time;
- Benefits can be paid;
- Unemployment, social security, and Medicare taxes are withheld;
1099 Independent Contractor
- Is paid for services provided;
- Benefits cannot be paid;
- Unemployment, social security, and Medicare taxes are not withheld;
Breaching an employment contract can affect the employee or employer in different ways. Most commonly, this is the result of the employee. Depending on the type of offense they committed in their agreement, they may have to pay the employer a settlement or agree to a payout option in the future.
- Terminating before the End Date
For fixed-term employment contracts, the employee will usually have an “opt-out” clause that defines some stiff penalties as the employer usually had to train the employee for some time in order to get them where they are. Therefore, if the employee decides to terminate their agreement before the end date it could lead to litigation that would not bode well for the employee.
Advice: Go to the manager or boss and request to break the agreement. If it is presented that the employee will leave no matter what, even if litigation is brought upon them, they will be more likely to settle for a cash payment.
- Breaching the Non-Compete
If the employee decides to break the agreement by working in the same field as the previous employer be ready for a full-scale lawsuit. No employer likes to be taken advantage of, let alone, have a previous colleague enter into their niche with all the knowledge they attained from the employer. This is likely the most difficult type of breach of contract to have the employer walk-away from as it will directly impede on their current business and revenue.
Advice: The best chance is to look up the respective State’s laws in order to see if there is any type of loophole available. In recent years, there has been a movement to limit or ban the use of non-compete agreements.
- Breaching Confidentiality
Under the circumstance the employee violates the confidentiality (or non-disclosure) section of their agreement this will usually involve hefty penalties if the employer finds out. Upon the employer finding out, the employee will most likely receive a cease and desist letter or injunction which would spell out the penalties and liability of the employee if he or she should continue breaching their confidentiality.
Advice: There is no legal way around spreading proprietary, and most likely, sensitive information of the employer. Therefore, it should be the utmost priority that the employee attempt to make amends with the employer to lessen their financial and legal liability.
There are two (2) types of termination:
- At-Will Agreements – The employee will have to view their employment agreement to view the terms of such a termination. This usually involves giving the employer two (2) weeks’ notice, through a resignation letter (Adobe PDF, Microsoft Word), in order to terminate the agreement and successfully quit their position with the company.
- Fixed Period Agreements – If the contract has remaining time left and the employee would like to quit early, he or she may run into some issues. Most commonly, there will be a fine involved. Therefore, the employee will have to check their agreement to view what the penalty is, if so, will be obligated to pay the consequences under its terms.
- At-Will Agreements
Termination. As the Employer and Employee will attempt, in good-faith, to a long profitable and good standing relationship, the employment relationship shall be considered “At-Will” which means the relationship can be terminated by either party. Furthermore, termination may be for any reason, at any time, and with or without cause. Any statements or representation to the contrary should be regarded as void and invalid.
- Fixed Agreements
Termination. The Employer and Employee agree that the employment for the Position shall begin on the ____ day of ______________________, 20____ and end on the ____ day of ______________________, 20____.
If the Employer decides to terminate this Agreement before its end date, there shall be:
☐ No Penalty.
☐ A penalty in the amount of $______________________ that shall be paid to the employee.
If the Employee decides to terminate this Agreement before its end date, there shall be:
☐ No Penalty.
☐ A penalty in the amount of $______________________ that shall be paid to the employer.
A moonlighting clause is standard for most employment agreements as it does not allow the employee to work another position for another employer at the same time as working another position. This is especially recommended for individuals who have been self-employed for a period of time such as a real estate agent which is something that can be done on the side. Most employers want the full focus and attention of their employees on the job.
Other Employment. Under this Agreement, the Employee agrees to not accept or work in any related or unrelated job, consulting work, directorship, or employment that may conflict with Employee’s duties and responsibilities to Employer, including the duty of loyalty, without the written approval of the Employer.
The minimum wage, per the Fair Minimum Wage Act of 2007, was the last time the federal government adjusted the minimum wage and had set to $7.25 per hour.
- Alabama – $7.25
- Alaska – $9.84
- Arizona – $10.50
- Arkansas – $8.50
- California – $11.00
- Colorado – $10.20
- Connecticut – $10.10
- Delaware – $8.25
- D.C. – $12.50
- Florida – $8.25
- Georgia – $7.25 (State law is $5.15)
- Hawaii – $8.25
- Idaho – $7.25
- Illinois – $8.25
- Indiana – $7.25
- Iowa – $7.25
- Kansas – $7.25
- Kentucky – $7.25
- Louisiana – $7.25
- Maine – $10.00
- Maryland – $9.25
- Massachusetts – $11.00
- Michigan – $9.25
- Minnesota – $9.65
- Mississippi – $7.25
- Missouri – $7.85
- Montana – $8.30
- Nebraska – $9.00
- Nevada – $8.25
- New Hampshire – $7.25
- New Jersey – $8.60
- New Mexico – $7.50
- New York – $10.40
- North Carolina – $7.25
- North Dakota – $7.25
- Ohio – $8.30
- Oklahoma – $7.25
- Oregon – $10.25
- Pennsylvania – $7.25
- Rhode Island – $10.10
- South Carolina – $7.25
- South Dakota – $8.85
- Tennessee – $7.25
- Texas – $7.25
- Utah – $7.25
- Vermont – $10.50
- Virginia – $7.25
- Washington – $11.50
- West Virginia – $8.75
- Wisconsin – $7.25
- Wyoming – $7.25
Step 2 –