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
1 – Acquire The Paperwork On This Page To Develop Your Employment Agreement
Download the “Adobe PDF” version of the pictured form by selecting the blue button with the appropriate label or the link above. Similarly, you can acquire this agreement as a “Microsoft Word” document by choosing the adjacent button or link.
2 – Use the Introduction To Establish Several Basic Facts Defining The Employment
The paragraph beginning this contract contains a few areas awaiting your entries of information. The first of which will be the effective calendar date applying to the agreement between the Employer and Employee that we will discuss. Three separate empty lines will expect the calendar day (i.e. 1st, 01, 2nd, 02, etc.), the month, and the year (two digits) of this date. The introduction continues with a few more requests. Locate the line after the word “Between” then the Employer’s legal name on it. Continue your entries with the Employer’s street address, city, and state the next three available areas after the term “…With A Mailing Address Of” After applying the effective date and Employer to this paragraph, produce the Employee’s name on the last blank line.
3 – Expand On The Wording Provided With Details Of Employment
Some areas of this contract require supplementation to its wording while others do not. The first article should be read by both parties and should be left as is while the second article (“II. Position”) needs your attention. Report the official name of the position the Employee will have once hired after the words “As A” at the beginning of the second article. Read through this paragraph then indicate if the Employee will work a “Part-Time” or “Full-Time” schedule by marking the checkbox corresponding to the appropriate description. Lastly, furnish the number of hours required by the Employee for each week of employment on the line between “…Will Devote” and “Hours Per Week…” The earnings of the Employee will be addressed in “III. Compensation.” This material can be reported as an hourly or annually. Record how much money the Employer will pay the Employee to the blank lines in this statement and check either the box between “Per” and “Hour” or the checkbox attached to “Annually” to indicate whether you have recorded how much the Employer will “Per Hour” or “Annually” The statement making up the third article will also need you to document how often mandatory deductions will be made from the Employee pay by marking the box “Weekly,” “Bi-Weekly,” “Monthly,” “Quarterly” or “Annually.” Now it is time to address the statement in “IV. Benefits.” This will give the Employer and the Employee a chance to solidify such items as insurance plans, 401k plans, bonus incentive programs, or any other similar items the Employer and Employee will participate in for the benefit of the Employee. The blank lines just before the parentheses label “(Benefits)” in this article.
4 – Discuss The Status And Conditions Of Employment
Many Employers will institute a “Probationary Period” where the Employee’s performance can be evaluated before proceeding with the employment benefits defined above. Record the number of days that make up the probationary period on the blank line after the words “…That The First” and the term “Days Of Employment” Once the probationary period has successfully completed with a positive performance on the Employee’s part, the general terms of most employment agreements will institute a policy where the Employee will be entitled to a predetermined amount of time off from work while still earning their full paycheck. Three optional statements have been included in “VI. Paid Time Off” so you may solidify the nature and amount of time-off granted to the Employee. If the Employee will be given Vacation time, then select or fill in the box labeled “Paid Vacation Time.” This choice requires you list how much Vacation Time the Employee is entitled to on the blank line provided and that you also select the box labeled “Days,” “Weeks,” or “Months” so a proper report can be completed. The second statement should be selected if the Employer grants a certain amount of “Paid Sick Leave” per year. If so, fill in the second checkbox in the left margin, record the “Amount Of” paid sick leave on the blank space in this choice then indicate if you are reporting this as “Days,” “Weeks,” or “Months” by choosing one of these items in this statement. If there are other definitions to paid time-off (i.e. “Personal Days”) then you can list them by checking the “Other” box and directly reporting them on the blank line provided. The seventh item in this contract will require a solid report on the “Employment Type” how both Employer and Employee have agreed this employment be classified. Two basic categories are provided for you to choose from in “VII. Employment.” You must choose the one that describes the employment status of the Employee with the Employer. If this is an “At-Will Employment Arrangement” then select the first checkbox statement in this list. You will also need to choose one of the two statements (“Notice Required” or “No Notice Required”) to indicate how much time the terminating party must give the remaining party to prepare for the end of the employment agreement. Note: If notice will be required then you must indicate how much must be given on the blank line in that statement.
If the “Employment Type” can be considered a “Fixed Term…,” meaning that it will begin and terminate naturally on predetermined calendar dates, then select the “Fixed Term Employment Agreement.” You must define the starting calendar date of employment and the last calendar date of employment to the two sets of preformatted areas (following the terms “…Shall Begin On” and “…End On The.” In addition to this, you must indicate if there are any penalties involved to a party that decides to terminate this agreement. Notice in the example below that both the Employer and the Employee will have to pay a sum of money if terminating this employment prematurely (before the termination date you list). If some contracts, an Employee may be entitled to consolatory payment if the Employer terminates the contract prematurely. If this is the case, then mark the first checkbox statement in “VII. Severance” and record how many pays checks the Employee will receive. If this inapplicable because the Employee “Shall Not Be Entitled To Severance if terminated early, mark the second checkbox. Another topic that should be addressed regarding termination is the level of confidentiality both parties will agree to. Naturally, the Employee will need to agree not to misuse or illegally dispense the trade secrets of the Employer and this must be balanced with the Employee being able to further his or her career in the field. To this end, article “IX. Non-Competition & Confidentiality” will need you to record a number of “Days,” “Weeks,” or “Months” where the Employee must adhere to the limitations that have been placed in this statement. Achieve this by entering the number on the blank line and checking the box next to “Days,” “Weeks,” or “Months” to complete the task. The final article that requires material supplied to it bears the title “XIII. Choice Of Law.” Here, you must report which state’s laws hold this contract and its participants accountable by entering it on the blank line at the end of the sentence.
5 – Both Sides Of This Agreement Must Join Together To Execute It
The Employer in this agreement will need to show his or her intention to honor it by signing the blank line In the “Employer” section at the end of this paperwork attached to the label “Signature” After the signing, the Employer’s Signature Party must print his or her name on the “Print Name” line and record the “Title” or position held with the hiring entity on the line below it. Finally, the “Date” line will require the calendar date when the signature he or she provided was executed. Once done, the Employer should relinquish possession of this contract to the Employee so that he or she can sign the “Signature” line in the “Employee” area. After signing his or her name, the Employee must record any “Title” he or she currently holds and the signature “Date.”