Employment Contract Templates (6)

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Updated November 28, 2022

An employment contract is between an employer and the employee being hired to perform a service in exchange for payment. An employee’s pay, benefits, and other terms of employment are negotiated between the parties during the hiring process. After the hiring, workers are commonly considered “W-2 employees” and have their payroll taxes withheld from compensation.

Table of Contents

By State

By Type (6)


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

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Independent Contractor Agreement – 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.

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Internship Agreement – When hiring an unpaid intern that agrees to work for on-the-job training related to their field of study.

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

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

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Subcontractor Agreement – 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.

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What is an Employment Contract?

An employee contract is between an employer willing to pay an individual for their services. The employer can choose to pay the employee per hour or on a salary (annual basis). The employee is required to uphold their duties and responsibilities for the duration of the contract.

IRS Requirements

The following documents are required for US companies hiring citizens and residents:

  • 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 (if more than $600 is to be paid for services or labor).

Provisions and Clauses of an Employment Contract

An employment contract is made up of different stipulations. Upon signing the agreement — as long as the provisions and clauses are within the bounds of the law — the contract is effective. It’s important for both employers and employees to know what rules to which they’re bound during someone’s employment term.

Duties: The employee’s title and main duties bind the worker to carry out the duties within the contract. Adding clauses that suggest that the duties could change over time always pads a contract with flexibility.

Compensation: Compensation sets the starting wage that the employee will be paid and is typically categorized into salary (yearly pay) or hourly pay, as well as how often the employee will be paid.

Termination: Some employment contracts are not longstanding, and some have an end date. Some renew yearly. The termination date of the contract would be listed in these cases, but in the case of at-will employment, the termination section might be where

Non-Compete: Employers have the option to include a non-compete clause for a set timeline, which would prevent workers from bringing trade secrets to competing organizations. With a stringent non-compete, employees that leave might not be able to work for employees in similar industries.

Trial Period: Also known as the “probationary period,” and is when a new employee is hired on a no-commitment basis for a set time, after which the employer will have the choice of either terminating or retaining the employee. If the employee is retained, employer benefits like healthcare and more typically begin.

Benefits: Benefits like health insurance, PTO, sick leave, and any other extras that the company provides the employee in addition to their salary should be listed.

Frequently Asked Questions (FAQs)

Difference between Part-Time vs. Full-Time

  • Part-time: Generally speaking, an employee working between 1 to 34 hours per week can be qualified as full-time employment in the United States.
  • Full-time: There are no federal laws that define “full-time work”, although 35 to 40 hours per week is considered to be full-time work. other than what are the maximum hours (29 CFR § 778.101) which is deemed to be 40 hours in a given workweek before overtime is required (overtime pay must be at least one and a half (1.5) times pay).

Difference between an Employee vs. Independent Contractor

The main difference is that 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 withhold tax payments;
  • When hiring, employee completes IRS Form W-4;
  • Employer does obtain unemployment insurance;
  • Paid hourly or salary; and
  • 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
  • Contractor works for their own business.

What is At-Will Employment?

Almost every employee who is part of an organization’s staff is employed “at will,” except those in the state of Montana. At-will employment is a type of employment where either the employee or the employer may terminate employment at any time, but the employer may not do so for any illegal reason.

What are the Federal Employment Discrimination Laws?

Pursuant to 5 U.S.C. 2302(b), workplaces are subject to federal employment and hiring discrimination laws. Employees and applicants may not be discriminated against on the basis of:

  • Race
  • Color
  • National origin
  • Religion
  • Sex (including gender identity and sexual orientation)
  • Pregnancy
  • Age (40 or older)
  • Disability
  • Genetic information

Sample

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EMPLOYMENT CONTRACT

 

This employment agreement (“Agreement”) is made and effective as of [DATE], by and between:

Employer: [EMPLOYER], with a mailing address of [ADDRESS], and

Employee: [EMPLOYEE], with a mailing address of [ADDRESS].

The parties agree to the following:

1. EMPLOYEE DUTIES. The Employee will act in accordance with this Agreement and with the best interests of the Employer in mind and agrees to adhere to any and all policies, procedures, rules, regulations, as administered by the Employer. The Employee agrees to abide by all local, county, State, and Federal laws while employed.

2. RESPONSIBILITIES. The Employee shall be given the job title of [TITLE], which shall involve: [DESCRIPTION].

The Employer may also assign duties to the Employee from time to time. The Employee shall be expected to work full-time part-time.

3. EMPLOYMENT PERIOD. The Employer agrees to hire the Employee: (check one)

At-Will which means this Agreement may be terminated at any time by either the Employee or Employer.

For a Specified Time-Period beginning on the [DATE] and ending on the [DATE].

4. PAY. Payment shall be distributed on a weekly bi-weekly monthly quarterly annual basis.

5. TRIAL PERIOD. The employee will not be eligible for Benefits, Vacation Time, or Personal Leave after the first [DAYS] of employment

6. EMPLOYEE BENEFITS. During the period of employment, the Employee shall be eligible to participate in benefits established by the Employer. These include [BENEFITS]

7. VACATION TIME. After the Trial Period is complete, the Employee is entitled to [#] days off per year of which is required to be mutually benefiting of the Employer and the Employee. It is required for the Employee to give notice before scheduling their vacation in accordance with Company policy.

8. PERSONAL LEAVE. After the Trial Period, the Employee shall be eligible for [DAYS] days of paid unpaid time off per year for personal and/or medical issues.

9. FEDERAL HOLIDAYS. The Employee shall be entitled to [#] federal holidays per calendar year.

10. CONFIDENTIALITY. The Employee understands and agrees to keep confidential any information that could be considered proprietary to the Employer (“Confidential Information”). The Employee understands that disclosure of Confidential Information, either directly or indirectly, shall result in litigation with the Employer eligible for equitable relief to the furthest extent of the law, including but not limited to filing claims for losses and/or damages.

11. NON-COMPETE. (check one)

– There shall be no Non-Compete established in this Agreement.

– During the term of employment, the Employee understands that he or she will be subject to learning proprietary information which could be applied to competitors of the employer. To protect the fiduciary interests of the Employer, the Employee agrees to: (check all that apply)

– Withhold from working in the following industry(ies): [INDUSTRIES]

– Withhold from working for the following employer(s): [EMPLOYERS]

– Withhold from working in the same industry(ies) as the Employer in the following area(s): [INDUSTRIES]

– Other: [ADDITIONAL STIPULATIONS]

This Non-Compete shall be in effect for [#] Months  [#] Years following the date of Employee’s termination.

12. COMPLIANCE. The Employee agrees to all sections of this Agreement in addition to any rules, regulations, or conduct standards of the Employer, including obeying all local and federal laws. If the Employee does not adhere to this Agreement, including any task or obligation that is related to the responsibilities of their Position, the Employer may terminate this Agreement without severance.

13. AMENDMENTS. This Agreement may be modified or amended under the condition that any such amendment is attached and authorized by all parties.

14. SEVERABILITY. This Agreement shall remain in effect in the event a section or provision is unenforceable or invalid.

15. GOVERNING LAW. This Agreement shall be governed under the laws in the State of [STATE].

EMPLOYER

______________________________  [TITLE]     Date ______________________________

Signature

______________________________

EMPLOYEE

______________________________ [TITLE]      Date ______________________________

Signature

______________________________,

How to Hire an Employee (7 steps)

Before writing an employment agreement hiring parties should meet to discuss main employment terms 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

employer creating online job listing

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 depend on referrals, recruiting agencies, and applications received via online job postings.

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. However, if an employer is looking for top-level or specialized talent, a recruiting agency, though expensive, might be a better solution than spending countless hours searching for candidates.

Top Recruiting Agencies

Step 2 – Reviewing Applications

employer reviewing submitted applications online

The employer will likely receive a high number of applications and letters from potential candidates interested in the position. They will have to filter the candidates that they believe will be the best fit for the organization by their qualifications. It is against the law for employers to discriminate against applicants.

Step 3 – Set Up Interviews

employer interviewing candidate for job

Before any commitments are made, it’s best to have a conversation with multiple candidates to evaluate their strengths and weaknesses. It is also a good idea for the employer to have pre-written questions that explore not only the candidate’s job qualifications but also how they would react if put in particular situations in the workplace.

Free Video Chat Apps

Step 4 – Perform a Background Check

employer reviewing applicant background report on computer

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 BACKGROUNDCHECKS   ACCURATE CHECKR
PRICING $79.99 $33.15 $29.95 $54.99
DELIVERY 3-5 BUSINESS DAYS INSTANT VARIES 3-7 BUSINESS DAYS
EMPLOYMENT VERIFY $14.99 EXTRA X X X
SSN VERIFICATION
ADDRESS HISTORY
COUNTY CRIMINAL RECORDS X
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

 

Sex Offender Check

Step 5 – Negotiate the Terms

employer and employee sitting at table negotiating salary

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 a part 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, many 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 employer will authorize a job offer letter that includes the terms of employment.

Step 6 – Write the Employment Contract

employee signing employee contract

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

After completing, both parties are advised to take the document to their respective legal counsel. If the 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 – The Hiring Process

employer explaining required documents to new employees

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

Minimum Wage (Federal & State)

Federal

The federal minimum wage in the United States, under 29 U.S. Code §  206(a)(c), is $7.25 per hour. In most states, the minimum wage is higher.

By State

State Minimum Wage ($/hr) Laws
 Alabama $7.25 29 U.S.C. § 206
 Alaska $10.34 A.K. Dept. of Labor
 Arizona $12.80 A.Z. Dept. of Labor
 Arkansas $11.00 A.C.A. § 11-4-210
 California $15.00 / $14.00 Cal. Com. Code § 1182.12
 Colorado $12.56 C.O. Dept. of Labor
 Connecticut $13.00 PA 19-4 – HB 5004
 Delaware $10.50 Del. Code tit. 19, § 902
 Florida $10.00 Fla. Stat. § 448.110
 Georgia $7.25 29 U.S.C. § 206
 Hawaii $10.10 Haw. Rev. Stat. § 387-2
 Idaho $7.25 Idaho Code § 44-1502
 Illinois $12.00 820 Ill. Comp. Stat. §105/4
 Indiana $7.25 IC § 22-2-2-4(h)
 Iowa $7.25 Iowa Code § 91D.1(b)
 Kansas $7.25 Kan. Stat. § 44-1203
 Kentucky $7.25 Ky. Rev. Stat. § 337.275
 Louisiana $7.25 La. Stat. § 23:642
 Maine $12.75 Me. Stat. tit. 26, §664
 Maryland $12.50 M.D. Dept. of Labor
 Massachusetts $14.25 M.A. Dept. of Labor
 Michigan $9.87 M.I. Dept. of Labor
 Minnesota $10.33 / $8.42 M.N. Dept. of Labor
 Mississippi $7.25 29 U.S.C. § 206
 Missouri $11.15 M.O. Dept. of Labor
 Montana $9.20 M.T. Dept. of Labor
 Nebraska $9.00 Neb. Rev. Stat. § 48-1203
 Nevada $8.75 / $9.75 N.V. Dept. of Labor
 New Hampshire $7.25 N.H. Rev. Stat. § 279:21
 New Jersey $13 N.J. Rev. Stat. § 12:56-3.1
 New Mexico $11.50 N.M. Stat. § 50-4-22
 New York $13.20 N.Y. Dept. of Labor
 North Carolina $7.25 N.C. Gen Stat. § 95-25.3
 North Dakota $7.25 N.D. Cent. Code. § 34-06-22
 Ohio $9.30 O.H. Dept. Of Commerce
 Oklahoma $7.25 Okla. Stat. § 40-197.2
 Oregon $12.75 Or. Rev. Stat. § 653.025
 Pennsylvania $7.25 Act 5, § 4a.1
 Rhode Island $12.25 R.I. Gen. Laws § 28-12-3
 South Carolina $7.25 29 U.S.C. § 206
 South Dakota $9.95 S.D. Dept. of Labor
 Tennessee $7.25 29 U.S.C. § 206
 Texas $7.25 Tex. Bus. & Com. Code § 62.051
 Utah $7.25 Utah Code R610-1-3
 Vermont $12.55 Vt. Stat. tit. 21, § 384
 Virginia $11.00 Va. Code. § 40.1-28.10
 Washington $14.49 W.A. Dept. of Labor
Washington D.C. $15.20 W.V. Dept. of Employment
West Virginia $8.75 W. Va. Code § 21-5C-2
 Wisconsin $7.25 Wis. Stat. § 104.035
 Wyoming $7.25 29 U.S.C. § 206

Related Agreements


Dentist Employment Agreement – Between a dental office and a practitioner (“dentist”).

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

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

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