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.
At-Will – Most common, allows employment to be for an indefinite period of time. If either party decides to terminate the agreement this would commonly require either party giving notice (usually 2 weeks).
Fixed Term – Start and end date. Both parties will not have any liability to one another other than confidentiality or non-compete clauses.
Table of Contents
- Employment Agreements: By State
- Employment Agreements: By Type
- Employment Agreement: Sample
- Employment Contracts: (Other)
- How to Hire an Employee
- W-2 Employee vs Independent Contractor
- Breaching an Employment Agreement
- Terminating an Employment Agreement
- Moonlighting Clause
- Minimum Wage ($ / Hour)
- How to Write an Employment Agreement
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
Employment Agreements By Type
At-Will Employment Agreement –
Dentist Employment Agreement –
Employment Settlement Agreement –
Employment Termination Agreement –
Executive Employment Agreement –
Pharmacist Employment Agreement –
Physician Employment Agreement –
EMPLOYMENT CONTRACT AGREEMENT
This Employment Contract (“Agreement”) is made as of the [EFFECTIVE DATE] between [EMPLOYER’S NAME] with a mailing address of [EMPLOYER’S ADDRESS] (“Employer”), and [EMPLOYEE’S NAME] (“Employee”).
WHEREAS the Employer desires to obtain the benefit of the services of the Employee, and the Employee desires to render such services on the terms and conditions set forth.
IN CONSIDERATION of the promises and other good and valuable consideration, the parties agree as follows:
I. Employment. The Employee acknowledges that they will, at all times, faithfully, industriously, and to the best of their skills, experience, and talents, perform all of the duties required of the Position. In carrying out these duties and responsibilities, the Employee shall comply with all Employer policies, procedures, rules, and regulations, both written and oral, as are announced by the Employer from time to time.
II. Position Title. As a [POSITION OR TITLE OF EMPLOYEE] (“Position”), the Employee is required to perform all of their necessary job functions and duties, and all other duties that may be assigned to Employee from time to time by Employer. This is [FULL OR PART-TIME] position with the expectation that the Employee will devote [# OF HOURS PER WEEK] hours per week to the Position. This may change from time to time as the Employer sees fit.
III. Compensation. As full compensation for all services provided, the Employee shall be paid at the rate of [DOLLARS IN TEXT] dollars [$_______________] per [HOUR OR ANNUAL BASIS] and will be subject to review of their work on a periodic basis. Such payments shall be subject to standard mandatory deductions by the Employer (i.e., Federal & State Taxes, Social Security, Medicare) and shall be made on a [PAYMENT INTERVAL] basis.
IV. Benefits. In addition, the Employee will be eligible to participate in bonuses and other employee benefit plans established by the Company for its employees. The Employer currently offers the following benefits to its employees: [BENEFITS] (“Benefits”)
V. Probationary Period. It is understood and agreed that the first [# OF DAYS] days of employment shall constitute an initial term for the Employee (“Probationary Period”). During the Probationary Period, the Employee is not eligible for paid time off or other Benefits as mentioned in Section IV. During the Probationary Period, the Employer retains the right to exercise at will employment at any time and may terminate the Employee at any time without notice or cause in accordance with State and Federal laws.
VI. Paid Time Off. The Employee is not eligible for any type of paid or unpaid leave until after the Probationary Period has passed successfully.
The Employee shall be entitled to: (check all that apply)
☐ – Paid Vacation time in the amount of [# OF DAYS] per year;
☐ – Paid Sick leave in the amount of [# OF DAYS] per year;
☐ – Other: [IF ANY]
The Employer reserves the right to change or otherwise modify, in its sole discretion, any paid time off policies.
VII. Employment Type. The Employer and Employee agree to enter into an:
☐ – At-Will Employment Arrangement. 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.
☐ – Notice Required. Termination of this Agreement must be made with at least [# OF DAYS] days’ notice to the other party.
☐ – No Notice Required. Under no circumstance shall notice, written or oral, be required to terminate this Agreement.
☐ – Fixed Term Employment Agreement. The Employer and Employee agree that the employment for the Position shall begin on the [1ST DAY OF EMPLOYMENT] and end on the [LAST DAY OF EMPLOYMENT]
☐ – Employer’s Termination (Fixed Term). 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.
☐ – Employee’s Termination (Fixed Term). 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.
VIII. Severance. Should the Employer terminate this Agreement at any time after the Probationary Period, the Employee:
☐ – Shall be Entitled to Severance. Severance shall be equal to the Employee’s pay at the time of termination and shall last for a duration of [# OF DAYS] days after the termination date.
☐ – Shall Not be Entitled to Severance. If terminated, the Employee’s pay, benefits, and any other privileges provided by the Employer shall terminate immediately.
IX. Non-Competition Covenant & Confidentiality. During the term of employment, the Employee may have access to certain confidential information and may develop certain proprietary information or inventions that will be the property of the Employer. Employee agrees not to disclose any such information that has been learned, created, or discuss future plans with anyone except for those within the company of the Employer and their qualified representatives, agents, and any authorized personnel. This shall be in effect for [TERM OF NON-COMPETE] after the termination of the Employee’s employment (“Non-Compete Period”). If the Non-Compete Period is longer than the State mandated time-frame, the Non-Compete Period shall be the maximum time-period allowed by law.
Employer requires that the Employee shall not bring any confidential or proprietary material of any former employer or to violate any other obligations the Employee may have to any former employer.
During the period that Employee renders services to the Employer, Employee agrees to not engage in any employment, business, or activity that is in any way competitive with the business or proposed business of the Employer. Employee shall disclose to the Employer in writing any other gainful employment, business, or activity that he or she is currently associated with or participating in that competes with the Employer. Employee shall not assist any other person or organization in competing with the Employer or in preparing to engage in competition with the business or prospective business(es) of the Employer.
Furthermore, it is agreed that during the Non-Compete Period the Employee shall not hire or attempt to employ any current employees of the Employer.
It is further acknowledged and agreed that during the Non-Compete Period the Employee shall not solicit business from the Employer, including but not limited to, current or past clients that were retained by the Employer.
X. Integration. This Agreement contains the entire agreement between the parties, superseding in all respects any and all prior oral or written agreements or understandings related to the employment of the Employee by the Employer and shall be amended or modified only by written instrument signed by both of the parties hereto.
XI. Authorization to Work. Please note that due to federal regulations adopted in the Immigration Reform and Control Act of 1986, within three (3) business days of starting the Position that the Employee will need to present documentation demonstrating their authorization to work in the United States.
XII. Severability of Contract. The parties hereto agree that in the event any article or part thereof of this contract is held to be unenforceable or invalid, then said article or part shall be struck, and all remaining provisions shall remain in full force and effect.
XIII. Choice of Law. This contract shall be governed, interpreted, and construed in accordance with the laws of the State of [STATE]
If the Employee decides to accept this Agreement, please sign in the space indicated. The signature will acknowledge this Agreement has been read, understood, and agreed to the aforementioned terms and conditions.
IN WITNESS WHEREOF the Employer has caused this Agreement to be executed by its duly authorized officers and the Employee has agreed as of the date first above written.
______________________________ Date ______________________________
______________________________ Date ______________________________
Employment Agreements – A standard contract between an employer and an employee that establishes pay, benefits, and time-off.
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.
Job Offer Letters – Much like a “letter of intent”, is a non-binding offer that is made to an individual that outlines pay (salary), benefits, and time-off. If accepted, the parties would move to draft an employment contract.
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.
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 – Largest website for job openings.
- Craigslist.org – 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 everyone 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 –