» Employment Contract Templates | W-2 and 1099 Agreements

Employment Contract Templates | W-2 and 1099 Agreements

Create a high quality document online now!

Employment contracts are between employers that hire and pay an employee, independent contractor, subcontractor, or freelancer. The employment status depends on the IRS tax classification of the hired individual; W-2 (employee) or 1099 (independent contractor). Upon agreement by both parties, the work schedule, location, and payment cycle are written in the employment contract.

Table of Contents

What is an Employment Contract?

A standard employment contract is between an employer that hires an individual to work on a per hour ($/hr) or per-project basis. Depending on the laws in the State, the employee may be subject to payroll taxes subject to withholding by the employer.

  • IRS Form W-4 – Required to be completed by the employee at the start of employment.
  • IRS Form W-9 – Required to be completed by an independent contractor at the start of employment.

Video Explanation

By State

By Type (4)


Independent Contractor Agreements – Classified by the IRS as a 1099 Employee, is an individual or entity that is paid to perform a service. Examples include contractors, medical professionals, attorneys, etc.

Download: Adobe PDF, MS Word (.docx), OpenDocument

 

 


Non-Compete Agreements – Depending on the restrictions, it does not allow an employee to work for a competitor or in the same industry as the employer.

Download: Adobe PDF, MS Word (.docx), OpenDocument

 

 


Non-Disclosure Agreements (NDA) – Requires an individual or business to keep information that was learned from the employer confidential.

Download: Adobe PDF, MS Word (.docx), OpenDocument

 

 


Subcontractor Agreements – Made between a contractor and a subcontractor. When a contractor has made an agreement with an individual or company they will then use a subcontractor agreement to satisfy portions of the original agreement by hiring other known specialists.

Download: Adobe PDF, MS Word (.docx), OpenDocument

 


Trial (Probationary) Period

The trial period, also known as the ‘probationary period’, is when a new employee is hired on a basis with no commitments. This is common with seasonal employees who are hired to see how they get along with and work with the rest of the organization. At the end of the trial period, which is commonly a specific date in their employment contract, the employer will have the choice of either terminating or retaining the employee. If the employer decides to keep the employee, this will usually trigger other employee benefits that come along with full-time work such as health insurance, increased pay, vacation time, etc.

Part-Time vs Full-Time

Generally speaking, an employee working between thirty (30) to forty (40) hours per week can be qualified as full-time employment in the United States. Although, there are no federal laws that define “full-time work” other than what is the maximum hours (§ 778.101) which is deemed to be forty (40) hours in a given work week before overtime is required (overtime pay must be at least one and a half (1.5) times pay).

Employee vs Independent Contractor

The main difference is an employee has Federal and State withholding taken from their pay by the employer while an independent contractor is responsible for payment of their own taxes to Federal and State authorities.

Employee

  • Employer does withholds tax payments;
  • When hiring, Employee completes IRS Form W-4;
  • Employer does obtains unemployment insurance;
  • Paid hourly or salary; and
  • an Employee works for the Employer’s business.

Independent Contractor

  • Client does not withhold tax payments;
  • Contractor completes IRS Form W-9;
  • Client does not obtain unemployment insurance;
  • Paid per project or task; and
  • a Contractor works for their own business.

Minimum Wage

The federal minimum wage in the United States, under 29 § 206(a)(c), is $7.25 per hour. In most States, the minimum wage is higher than that amount.

By State Minimum Wage

Income Tax Brackets

The tax bracket of an individual depends on how much they earn, their martial status (including how they wish to file with their spouse), number of children (“dependents”), and the State he or she resides.

Federal Bracket (%) + State bracket (%) = Total Tax Liability ($)

Therefore, an individual’s total tax liability is a combination of Federal and State taxes. If the individual resides in a large metropolitan area like New York City or Detroit, they may have a “City tax” as well.

Federal Tax Bracket

Passed on November 16, 2017, Public Law 115-97 (Tax Cuts and Jobs Act of 2017), updated the federal income tax brackets to the following:

Bracket Single Married (Joint) Married (Separate) Head of Household
10% $0 – $9,525 $0 – $19,050 $0 – $9,525 $0 – $13,600
12% $9,526 to $38,700 $19,051 – $77,400 $9,526 – $38,700 $13,601 – $51,800
22% $38,701 – $82,500 $77,401 – $165,000 $38,701 – $82,500 $51,801 – $82,500
24% $82,501 – $157,500 $165,001 – $315,000 $82,501 – $157,500 $82,501 – $157,500
32% $157,501 – $200,000 $315,001 – $400,000 $157,501 – $200,000 $157,501 – $200,000
35% $200,001 – $500,000 $400,001 – $600,000 $200,001 – $300,000 $200,001 – $500,000
37% $500,001+ $600,001+ $300,001+ $500,001+

State Income Tax Brackets

How to Hire an Employee

Before writing an employment agreement the parties involved should meet to discuss verbally the terms of the main items such as hourly pay/salary, job title, and responsibilities. The agreement will typically be written under the company policy which governs vacation time, personal leave, and benefits.

Step 1 – Make a Job Posting

The employer will need to utilize the internet to find the best talent. Far gone are the days of advertising in the “help wanted” section of the newspaper. Today, employers may use the web to find the specific talent they need.

Executive Positions

Entry-Level Positions

Seeking Out Talent

If the employer is looking to acquire talent from another company it is best to use social networks and contact them privately.

Step 2 – Review Incoming Applications

In all likelihood, the employer will be overloaded with resumés and applications from potential candidates interested in the position.

The employer will have to filter the candidates that they believe will be the best fit for the organization.

Step 3 – Setup Interviews

Before any commitments are made it’s best to have a conversation with the candidate to see their personality. It is also a good idea for the employer to have questions set up to see ask how the candidate would react if put in particular situations in the workplace.

Free Video Chat Apps

Step 4 – Perform a Background Check

Before any negotiations take place the employer should perform a criminal background check on the individual. Even though a person may be qualified for a job, he or she may have past convictions that will give an employer an idea of any violent or unlawful history.

Background Check Providers

GOODHIRE KENNECT HIRERIGHT ACCURATENOW
PRICING $79.98* $59.95 $39.95 $24.95
DELIVERY 3-5 BUSINESS DAYS 1-3 BUSINESS DAYS 2 BUSINESS DAYS 1-5 BUSINESS DAYS
EMPLOYMENT VERIFY $14.99 EXTRA X X X
SSN VERIFICATION
ADDRESS HISTORY
COUNTY CRIMINAL RECORDS
NATIONAL CRIMINAL RECORDS
CREDIT CHECK $14.99 EXTRA X X X
SEX OFFENDER REGISTRY
SCHOOL RECORDS $14.99 EXTRA X X X
DRIVING RECORDS $14.99 EXTRA X X X
PROFESSIONAL LICENSE VERIFICATION $14.99 EXTRA X X X
U.S. TERROR WATCH LIST X

*$29.99 plus $49.99 setup fee (total $79.98)

Sex Offender Check

Step 5 – Negotiate the Terms

The employer and employee should negotiate and agree to the following:

  • Duties – Title and role in the company.
  • Period – At-will or for a specific length of time.
  • Payment – Salary or $/hour including any commissions or bonuses.
  • Benefits – Such as health care, retirement plans, etc.
  • Ownership Interest – If ownership will be apart of the agreement.
  • Vacation Time – How many days off per year.
  • Personal Leave – Days off for personal or health-related matters.
  • Confidentiality (NDA) – If the employee will be required to keep the company’s proprietary information a secret.
  • Non-Compete – If the employee will be prohibited from working for competitors or in the same industry.

If the employer is a larger company then a lot of the above-listed items will be located in the employee handbook. Otherwise, the employer and employee will be responsible for negotiating their terms respectively.

After the initial negotiations are complete, the employee and employer may move to authorize a letter of intent to outline the terms in a non-binding manner or go straight to writing an employment agreement.

Step 6 – Write the Employee Agreement

DownloadAdobe PDF, Microsoft Word (.docx), or Open Document Text (.odt).

After completing both parties are advised to take the document to their respective legal counsel. If employee and employer agree to the terms of the agreement it is time to sign.

Notary Public – It is highly recommended for executive positions that the form is signed in the presence of a notary public. A form that is notarized represents that the parties displayed government-issued identification before authorization.

Step 7 – Hiring Process

After hiring, the employer will need to have the employee complete and sign the following documents:

  • IRS Form W-4 – For the employer to calculate the employee’s withholding taxes.
  • Direct Deposit Authorization Form – Allows the employer to pay the employee directly via bank transfer (ACH).
  • Employee Handbook – Informs the employee of standard company policies.

How to Write an Employee Contract

Download: Adobe PDF, Microsoft Word (.docx) or Open Document Text (.odt)

1 – The Employee Agreement Is Available For Download

Locate the buttons beneath the picture on this page. You may download the form displayed in any of the formats presented by selecting the appropriate button.

2 – Introduce The Employer And Employee

The first paragraph of this contract will serve as a summary of its purpose. We will begin satisfying the information it requests by filling in the month and calendar day this agreement becomes effective on the first blank line. The second blank line will give you the opportunity to report the two-digit year of the effective date. Now we will provide some basic facts regarding the Employer. Indicate if the Employer is an “Individual” or a “Business Entity” by marking either the first checkbox or the second checkbox (respectively) presented. Produce the full name of the Employer on the blank space after the phrase “…Known As.” You will also need to supply the Employer’s legal street address, city, and state to the next three blank spaces. The Employee must also be introduced in this paragraph. Thus, use the next four empty spaces to present the full name of the Employee then, his or her street address, city, and state. The next paragraph will also contain an empty space requiring information. Locate the blank line after the words “…For The Position Of” then report the job the Employee is being hired for (i.e. Accountant, Administrative Assistant, etc.). This document will continue its basic summary through the first article (“I. Employee Duties”) and into the second article (“II. Responsibilities”). The first blank space in the second article will require the official job title being assigned to the Employee. This can either be the same information you supplied to the second paragraph or a more detailed position. Use the second blank line in this paragraph to provide a detail on the duties the Employee must perform to satisfy the terms of the agreement. Now, we will set the Employee to work either “Full-Time” or “Part-Time” by selecting either the first checkbox or the second checkbox presented in this paragraph.

3 – Set The Term Of Employment

In the third article, titled “III. Employment Period,” the issue of how obligated each party will be to continue the employment status being developed here will be handled. You will have to choose one of two basic conditions to apply to the employment status. If employment will be maintained “At-Will” or so long as both parties wish to continue the arrangement, then mark the first checkbox. If this is an “At-Will” situation, then we will need to define how these parties should terminate the employment. First, locate the item labeled “A.) Employee’s Termination” and enter the number of “Days’ Notice” the Employee must give the Employer of his or her termination. If the Employee is eligible for severance pay (equal to the current pay rate) when he or she terminates employment, you must define how long the severance period will be. Use the second blank line to do so. The manner in which the Employer should terminate the agreement will also need to be defined in an “At-Will” arrangement. Begin by defining the number of days before the intended termination date the Employer must give the Employee as notice on the first blank line in item “B.) Employer’s Termination.” If the Employee is entitled to a severance package when the Employer terminates this agreement, report how long the severance period is on the second blank line in this item. If the terms of this employment are to stay in place for a predetermined amount of time, then you must choose the second choice “For A Specified Time-Period.” Setting this onto the employment arrangement will mean you must produce a start date of employment and an end date. Furnish the start date as a calendar day, month, and two-digit year across the first three blank spaces of this statement then document the end date as the last calendar day, month, and two-digit year of employment using the last three blank lines. Some questions will accompany arrangements expected to bind two parties for a certain amount of time. The next two items will clear up some basic issues regarding termination. Begin by marking the first checkbox in “A.) Employee’s Termination” to indicate the Employee will have the right to terminate this agreement prematurely or by marking the second checkbox of this same item to prevent the Employee from having the right to terminate the employment here. If the Employee does have this right, then document how many days’ notice must be given to the Employer of the termination on the first blank line and the length of time from the termination where the Employee will receive severance pay. In “B.) Employer’s Termination,” we will need to choose between one of two checkboxes to indicate if the Employer has the right to cancel this agreement during the concerned employment. If so, then mark the checkbox labeled “Shall.” If not, select the checkbox labeled “Shall Not.” Keep in mind that if the Employer shall retain this right, then you must record how many days’ notice this entity must give the Employee before terminating this agreement on the first blank line and how long after the date of termination the Employee will receive severance pay on the second blank line.

4 – Discuss Employee Pay And Benefits

The fourth article will seek to define how much the Employer will pay the Employee to fulfill his or her duties. Find the article labeled “IV. Pay.” Use the first two blank lines to document how much money the Employer will pay the Employee (report this figure written out as words on the first line and numerically on the second one). In addition to reporting this figure, you must define whether this amount is an hourly rate or an annual salary. Mark the checkbox labeled “Per Hour” if the sum you reported will be paid to the Employee every hour or the “Salary On An Annual Basis” if the figure you entered is the total amount the Employee will receive every year regardless of how many hours he or she works. We must also record how often the Employee will receive compensation. Five options are available. Simply mark the checkbox labeled “Weekly,” “Bi-Weekly,” “Monthly,” “Quarterly,” or “Annual” to solidify how often the Employee will be given a paycheck. There will be some additional areas available to cover the Employee’s compensation, however, these items only need to be filled out if they apply to the current arrangement. If the Employee will receive a commission, then record how often he or she will receive a commission on the first blank line in the item titled “A.) Commissions.” You must also document the exact method used to calculate each commission payment to the Employee using the second set of blank lines. If the Employer intends to provide a bonus, then locate the next item (“B.) Bonus”) and record how the frequency of bonuses that will be paid to the Employee (i.e. Quarterly). Make sure to also define how the bonuses will be calculated by describing the calculation on the second set of blank lines. If the Employer intends on allowing the Employee the ability to participate and use the benefits set up by the Employer, then locate the blank lines in “V. Employee Benefits.” List each Employee benefit the Employer intends to make available to the Employee on these lines. Some Employers and Employees will agree that certain expenses paid for by the Employee when he or she is working may be repaid by the Employer. If this is the case, then check each checkbox labeled with an item the Employer will reimburse the Employee for paying in “VI. Out-Of-Pocket Expenses.” You may select “Travel,” “Food,” “Lodging,” and/or “Other.” The last checkbox (“Other”) will present a blank line where you should define what out-of-pocket expenses are reimbursable. In “VII. Ownership Interest,” mark the first checkbox if partial ownership of the Employer’s business will not be available to the Employee. If so, then mark and attach the specifics in a well-labeled signed and dated attachment. Many Employers will require a period of time after hiring where the Employee must prove his or her competence before receiving access to any benefits, vacation time, personal days, and/or medical leave. Locate the blank line in “VIII. Trial Period,” then enter the number of days that must elapse after the Employee’s date of hire before he or she can take advantage of the Employer package offered. The article titled “IX. Vacation Time” will present some standard language to assign a certain number of vacation days the Employee may use during the work year. Record this number of days on the blank line in this paragraph. The question of what happens to unused vacation days is often a concern of Employees. This article will also seek to address this issue through a checklist. Mark the checkbox attached to the statement that best describes how the Employer will treat unused vacation days. In this way, you can quickly indicate if unused vacation days will be “Converted to Cash,” “Eligible To Rollover,” “Forfeited At The End Of The Year,” or treated in some “Other” way. Keep in mind that some of these choices require additional information. Thus, if unused vacation days can be cashed in, supply the dollar amount paid for each unused day on the blank line in the first choice. If unused vacation days will rollover, then you must supply how many days may be rolled over in the space available in the second choice. If they will be forfeited altogether then mark the third statement.  If you have chosen “Other” then you must describe exactly how unused vacation days will be treated on the blank line provided. The next article, “X. Personal Leave,” will be used to document how many days an Employee may use for personal or medical leave. Report this number of days on the first blank line in this article. Specify whether the Employee will be paid or unpaid during personal days by selecting the first checkbox (“Paid”) or the second checkbox (“Unpaid”). As with vacation days, what is done with unused personal days is also an issue that should be dealt with. A brief checklist allowing you to disclose whether unused personal days can be “Converted To Cash,” “Eligible To Rollover,” or “Forfeited.” If the Employer will pay a certain amount of money at the end of the year for each unused personal day then, mark the first box and enter the dollar amount that will be paid on the blank line.  If the Employee can rollover these days, then select the second statement and enter how many days will rollover. If none of these three statements accurately define what will happen to unused personal days, then mark the box labeled “Other” and describe what happens to unused personal days on the blank line provided.

Once you selected the appropriate policy from the list above, locate the final statement in this article. Here, you must indicate the Employer’s stance on Employee options for years when he or she have used up all the personal days available in a year. Mark the first checkbox to indicate the Employer will allow the Employee to substitute his or her personal days with vacation days or the second checkbox if this will be against the Employer policy.

The last issue concerning time off will be dealt with in “XI. Federal Holidays.” Furnish the number of days the Employer will allow off for Federal Holidays per year on the blank line in this section.

5 – Address The Issues Of Non-Compete And Boundaries

The article labeled “XII. Confidentiality” will handle a sensitive topic. Most Employers and many Employees will usually want to safeguard their trade secrets or other confidential information. The language in this article is standard and will address some of the more general concerns nicely however, there will be a section requiring additional definitions. Find the item titled “A.) Post Termination” then use the blank line and the checkboxes labeled “Months” or “Years” to define how long the paragraph above remains active. Enter the number of months or years the “Confidentiality” paragraph will remain in effect on the blank line then mark the box labeled “Months” or “Years” to define the number you entered as one of these segments of time. Note: The limit of time this “Confidentiality” may not supersede the state or federal limits placed. Make sure you are abreast of the local laws when supplying this information. The next article will also deal with securing the Employer’s position in the open market. Locate article “XIII. Non-Compete.” If there is no Non-Compete Agreement set to become active because of this paperwork (and the employment arrangement it sets up) then mark the first checkbox in this article. If there is such an agreement in place, then you must select the second checkbox. Also, you will need to attend to the list of checkbox statements to further definite the Non-Compete Agreement being referred to. If the Employee has agreed to refrain from working in certain industries then, mark the checkbox statement “Withhold From Working In The Following Industries.” You must report each industry the Employee may not work in on the blank lines following this statement. Mark the second checkbox if the Employee has agreed to avoid working with or for certain employers. If so, then you must list each employer the Employee may not enter a working relationship with on the blank lines provided. If the Employee will be restrained from competing with the Employer in the same industry in certain areas, then mark the next checkbox and record each such neighborhood/county/region on the blank line provided. If none of these statements define the concerned Non-Compete Agreement or there are additional conditions not listed, mark the box labeled “Other” and report the agreed upon non-compete conditions. Now, enter the number of months or years the Non-Compete described above will be active on the first blank line in the statement beginning with “This Non-Compete Shall Be In Effect…” (using the Employee’s date of termination as the starting point), then mark the checkbox labeled either “Month” or “Years.” Next, we shall give some additional definition to the Employee’s boundaries in article “XIV. Employee’s Role.” Locate the checkboxes in this statement then either mark the first one to give the Employee the ability to “…Act In The Capacity Of The Employer” or the second checkbox to indicate the Employee will have no such right.

6 – Provide Additional Information Where Requested

The next section requesting information is article “XV. Appearance.” Find the blank line in this paragraph then, enter the number of times the Employee can be absent in one work year (outside of the vacation, personal, or medical days allotted by his or her benefits package) without being held in violation of this agreement. In some cases, an Employee may be rendered incapacitated or with a physical or mental disability that prevents him or her from functioning adequately on the job. If so, then use the blank line in “XVI. Disability” to report the number of days’ notice the Employer must give the Employee before terminating this contract for such a reason. There are many scenarios in which either the Employee or Employer must issue a written notice to the other. We must provide the full name and entire address where each of these parties may receive such a notice. Document the Employer’s mailing address on the set of blank lines under the “Employer” heading in article “XIX. Notices” then, fill in the Employee’s mailing address on the blank lines under the “Employee” heading in this article. In the statement labeled “XXIII. Governing Law,” report the name of the state where this agreement will be enforced and whose courts will govern both parties with this paperwork.

7 – A Signature Execution From Both Parties Is Required

Once this contract has been completed, each party should review the completed product. While reviewing he or she should locate the blank line labeled “Employee’s Initials” and “Employer’s Initials” then submit his or her initials to the appropriate area. The section labeled “Employer” at the end of this document will require that he or she sign and print his or her name on the lines labeled “Signature” and “Print Name.” Immediately after doing so, the Employer must enter the current calendar date on the line labeled “Date.” If the signature party signing the “Employer” section has a “Title” then it should be reported on the last line in this section. After reviewing this document to his or her satisfaction, the Employee must find the “Employee” section at the end of this paperwork. He or she must sign and date this contract on the blank line labeled “Signature” and “Date” (respectively). If the Employee holds a title, then it must be presented on the “Title” line.

Related Agreements


At-Will Employment Agreement – No time-period commitment by the employer. May terminate at any time with or without severance.

Download: Adobe PDF, MS Word (.docx), OpenDocument

 

 

 


Real Estate Agent Employment Agreement – Between a real estate agency and an agent.

Download: Adobe PDF, MS Word (.docx), OpenDocument

 

 

 


Dentist Employment Agreement – Between a dental office and a practitioner (‘dentist’).

Download: Adobe PDF, MS Word (.docx), OpenDocument

 

 

 


Employment Separation Agreement – Otherwise known as a ‘settlement’ or ‘severance’ agreement, outlines the terms and conditions of an employee’s termination.

Download: Adobe PDF, MS Word (.docx), OpenDocument

 

 



ABOUT SSL CERTIFICATES