Templates and Checklists


Employment Agreement



Douglas Bean
by Douglas Bean, J.D.

Purpose of the Employment Agreement

It’s important to spell out each of the important details of an employment relationship. This will keep both parties happy and allow the company and the employee to know exactly what to expect. An employment agreement is a great way to make sure all parties are "on the same page".

The Employment Agreement found below contains all of the important provisions a company or employee might want in their agreement. There are flexible paragraphs to allow changes in:

  • Employment type (part-time/full time, temporary/permanent)
  • Job responsibilities
  • Compensation
  • Benefits
  • Reporting structure
  • Leave
  • Confidentiality
  • Non-competition
  • Separation/Termination

Following the agreement (below) there are explanations to help you understand the important sections of the document.

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EMPLOYMENT CONTRACT

This Employment Contract (this "Contract") is made effective as of _________ , 20XX, by and between Company of [ADDRESS], [CITY], [STATE/COUNTRY], [POSTAL CODE], (the "Company") and Employee of [ADDRESS], [CITY], [STATE/COUNTRY], [POSTAL CODE] (the "Employee").

  • A. Company is engaged in the business of [INSERT BRIEF DESCRIPTION OF THE COMPANY'S BUSINESS] {e.g., ACME, Inc. is in the business of selling fresh flowers}. Employee will primarily perform the job duties at the following location: [INSERT LOCATION WHERE EMPLOYEE WILL WORK], [INSERT CITY].
  • B. Employee will report to [INSERT NAME OF SUPERVISOR] as well as such other Company supervisory personnel as shall be designated by the Company from time to time.
  • C. Company desires to have the services of Employee.
  • D. Employee is an at will employee of Company. Either party is able to terminate the employment agreement at any time.

Therefore, the parties agree as follows:

1. EMPLOYMENT. Company shall employ Employee as a(n) [INSERT EMPLOYEE'S JOB TITLE] on a [Choose one: permanent, temporary] [Choose one: part-time, full-time] basis.

Employee accepts and agrees to such employment, and agrees to be subject to the general supervision, advice and direction of Company and Company's supervisory personnel. Employee shall provide to Company the following services:

1. [INSERT JOB RESPONSIBILITY #1]. 2. [INSERT JOB RESPONSIBILITY #2]. 3. [INSERT JOB RESPONSIBILITY #3]. [INSERT ADDITIONAL RESPONSIBILITIES AS NECESSARY].

Employee shall also perform (i) such other duties as are customarily performed by an employee in a similar position, and (ii) such other and unrelated services and duties as may be assigned to Employee from time to time by Company.

2. BEST EFFORTS OF EMPLOYEE. Employee agrees to perform faithfully, industriously, and to the best of Employee's ability, experience, and talents, all of the duties that may be required by the express and implicit terms of this Contract, to the reasonable satisfaction of Company. Such duties shall be provided at such place(s) as the needs, business, or opportunities of Company may require from time to time. Employee will receive periodic performance reviews, conducted by personnel designated by the Company and in compliance with company policies.

3. OWNERSHIP OF SOCIAL MEDIA CONTACTS. Any social media contacts, including "followers" or "friends", that are acquired through accounts (including, but not limited to email addresses, blogs, Twitter, Facebook, YouTube, or other social media networks) used or created on behalf of Company are the property of Company.

4. COMPENSATION OF EMPLOYEE. As compensation for the services provided by Employee under this Contract, Company will pay Employee [Choose one: $xxx per hour, $xxx monthly, $xxx yearly]. This amount shall be paid [Choose one: semi-monthly on the first day and the fifteenth day of the month, every two weeks for a total of twenty-six (26) pay periods annually, monthly] and subject to applicable federal, state, and local withholding. Upon termination of this Contract, payments under this paragraph shall cease; provided, however, that Employee shall be entitled to payments for periods or partial periods that occurred prior to the date of termination and for which Employee has not yet been paid, and for any commission earned in accordance with Company's customary procedures, if applicable. Accrued vacation will be paid in accordance with state law and Company's customary procedures. This section of the Contract is included only for accounting and payroll purposes and should not be construed as establishing a minimum or definite term of employment.

5. EXPENSE REIMBURSEMENT. Company will reimburse Employee for "out-of-pocket" expenses incurred by Employee in accordance with Company's policies in effect from time to time.

6. RECOMMENDATIONS FOR IMPROVING OPERATIONS. Employee shall provide Company with all information, suggestions, and recommendations regarding Company's business, of which Employee has knowledge, that will be of benefit to Company.

7. CONFIDENTIALITY. Employee recognizes that Company has and will have information regarding the following:

  • inventions,
  • products,
  • product design,
  • processes,
  • technical matters,
  • trade secrets,
  • copyrights,
  • customer lists,
  • prices,
  • costs,
  • discounts,
  • business affairs,
  • future plans,

and other vital information items (collectively, "Information") which are valuable, special and unique assets of Company. Employee agrees that Employee will not at any time or in any manner, either directly or indirectly, divulge, disclose, or communicate any Information to any third party without the prior written consent of Company. Employee will protect the Information and treat it as strictly confidential. A violation by Employee of this paragraph shall be a material violation of this Contract and will justify legal and/or equitable relief.

This Agreement is in compliance with the Defend Trade Secrets Act and provides civil or criminal immunity to any individual for the disclosure of trade secrets: (i) made in confidence to a federal, state, or local government official, or to an attorney when the disclosure is to report suspected violations of the law; or (ii) in a complaint or other document filed in a lawsuit if made under seal.

8. UNAUTHORIZED DISCLOSURE OF INFORMATION. If it appears that Employee has disclosed (or has threatened to disclose) Information in violation of this Contract, Company shall be entitled to an injunction to restrain Employee from disclosing, in whole or in part, such Information, or from providing any services to any party to whom such Information has been disclosed or may be disclosed. Company shall not be prohibited by this provision from pursuing other remedies, including a claim for losses and damages.

9. CONFIDENTIALITY AFTER TERMINATION OF EMPLOYMENT. The confidentiality provisions of this Contract shall remain in full force and effect for a period of [INSERT NUMBER OF YEARS] after the voluntary or involuntary termination of Employee's employment. During such period, neither party shall make or permit the making of any public announcement or statement of any kind that Employee was formerly employed by or connected with Company.

10. NON-COMPETE AGREEMENT. Employee recognizes that the various items of Information are special and unique assets of the company and need to be protected from improper disclosure. In consideration of the disclosure of the Information to Employee, Employee agrees and covenants that during his or her employment by Company and for a period of one (1) year following the termination of Employee's employment, whether such termination is voluntary or involuntary, Employee will not directly or indirectly engage in any business competitive with Company.

This covenant shall apply to the geographical area that includes [INSERT DESCRIPTION OF GEOGRAPHIC AREA]. Directly or indirectly engaging in any competitive business includes, but is not limited to: (i) engaging in a business as owner, partner, or agent, (ii) becoming an employee of any third party that is engaged in such business, (iii) becoming interested directly or indirectly in any such business, or (iv) soliciting any customer of Company for the benefit of a third party that is engaged in such business. Employee agrees that this non-compete provision will not adversely affect Employee's livelihood.

11. EMPLOYEE'S INABILITY TO CONTRACT FOR EMPLOYER. Employee shall not have the right to make any contracts or commitments for or on behalf of Company without first obtaining the express written consent of Company.

12. VACATION. Employee shall be entitled to [INSERT NUMBER OF WEEKS OF PAID VACATION] of paid vacation for each completed year of employment. Such vacation must be taken at a time mutually convenient to Company and Employee and must be approved by Company. Requests for vacation shall be submitted to Employee's immediate supervisor prior to January 31 of each year.

The provisions of this Vacation section are subject to change in accordance with Company policies in effect from time to time.

13. SICK LEAVE. After completion of [INSERT NUMBER OF MONTHS BEFORE EMPLOYEE WILL ACCRUE SICK LEAVE] of employment, Employee shall be entitled to [INSERT NUMBER OF HOURS OR DAYS PER YEAR EMPLOYEE WILL ACCRUE IN SICK LEAVE] paid time, due to illness or for personal business, for each calendar year beginning January 1, [INSERT CALENDAR YEAR SICK LEAVE BEGINS TO ACCRUE].

{Optional} Unused sick leave benefits as of December 31 of each year may be converted into cash compensation at a rate of $xxx.00 per hour. Sick leave may be accumulated from year to year up to a total of [INSERT NUMBER OF HOURS OF SICK LEAVE CARRYOVER]; excess amounts shall be forfeited.

{Optional} If Employee is unable to work for more than [INSERT TIME BEFORE WHICH EMPLOYEE CAN USE VACATION TIME AS SICK LEAVE] because of sickness or total disability, and if Employee's unused sick leave is insufficient for such period, a maximum of [INSERT NUMBER OF HOURS OF VACATION TIME THAT CAN BE CONVERTED TO SICK LEAVE] of Employee's unused vacation time shall be applied to such absence.

All requests for sick days off shall be made by Employee in accordance with Company policies in effect from time to time.

The provisions of this Sick Leave section are subject to change in accordance with Company policies in effect from time to time.

14. PERSONAL LEAVE. After completion of [INSERT NUMBER OF MONTHS OF EMPLOYMENT BEFORE PERSONAL LEAVE IS AVAILABLE] of employment, Employee shall be entitled to [INSERT NUMBER OF DAYS OR HOURS EMPLOYEE WILL RECEIVE AS PERSONAL LEAVE] paid time, for personal business or due to illness, for each calendar year beginning January 1, [INSERT CALENDAR YEAR STARTING DATE]. Unused personal leave benefits as of January 31 of each year may be converted into cash compensation at a rate of $xxx.00 per hour. Personal leave may be accumulated from year to year up to a total of [INSERT NUMBER OF HOUR OR DAYS OF PERSONAL LEAVE CARRYOVER AVAILABLE TO EMPLOYEE]; excess amounts shall be forfeited.

{Optional} If Employee is unable to work for more than [INSERT NUMBER OF DAYS EMPLOYEE MUST BE UNAVAILABLE FOR WORK BEFORE VACATION TIME CAN BE USED AS PERSONAL LEAVE] because of personal business, and if Employee's unused personal leave is insufficient for such period, a maximum of [INSERT NUMBER OF HOURS OR DAYS OF UNUSED VACATION TIME EMPLOYEE MAY USE TO CONVERT TO PERSONAL LEAVE] of Employee's unused vacation time shall be applied to such absence.

All requests for personal days off shall be made by Employee in accordance with Company policies in effect from time to time.

The provisions of this Personal Leave section are subject to change in accordance with Company policies in effect from time to time.

15. HOLIDAYS. Employee shall be entitled to [INSERT NUMBER] holidays with pay during each calendar year. All requests for holidays off shall be made by Employee in accordance with Company policies in effect from time to time.

The provisions of this Holidays section are subject to change in accordance with Company policies in effect from time to time.

{OPTIONAL – INSERT IF APPLICABLE} INSURANCE BENEFITS. Employee shall be entitled to insurance benefits, in accordance with Company's applicable insurance contract(s) and policies, and applicable state law. These benefits shall include:

  • health insurance,
  • disability insurance,
  • life insurance.

The provisions of this Insurance Benefits section are subject to change in accordance with Company policies in effect from time to time.

{OPTIONAL – INSERT IF APPLICABLE} BENEFITS. Employee shall be entitled to the following benefits:

- [INSERT DESCRIPTION OF ANY OTHER BENEFITS PROVIDED UNDER THE AGREEMENT]

as such benefits are provided in accordance with Company policies in effect from time to time.

Employee shall be able to participate in Company's pension plan in accordance with the plan's terms and the requirements of law.

18. TERM/TERMINATION. Employee's employment under this Contract shall be for an unspecified term on an "at will" basis. This Contract may be terminated by Company upon no written notice, and by Employee upon 14 days written notice. If Company shall so terminate this Contract, Employee shall be entitled to compensation for [INSERT AMOUNT OF SEVERANCE PAY] beyond the termination date of such termination, unless Employee is in violation of this Contract. If Employee is in violation of this Contract, Company may terminate employment without notice and with compensation to Employee only to the date of such termination. The compensation paid under this Contract shall be Employee's exclusive remedy.

19. TERMINATION FOR DISABILITY. Company shall have the option to terminate this Contract, if Employee becomes permanently disabled and is no longer able to perform the essential functions of the position with reasonable accommodation. Company shall exercise this option by giving [INSERT NUMBER OF DAYS NOTICE REQUIRED BEFORE THE COMPANY MAY TERMINATE FOR DISABILITY] written notice to Employee.

20. COMPLIANCE WITH EMPLOYER'S RULES. Employee agrees to comply with all of the rules and regulations of Company.

21. RETURN OF PROPERTY. Upon termination of this Contract, Employee shall deliver to Company all property which is Company's property or related to Company's business (including keys, records, notes, data, memoranda, models, and equipment) that is in Employee's possession or under Employee's control. Such obligation shall be governed by any separate confidentiality or proprietary rights agreement signed by Employee.

22. NOTICES. All notices required or permitted under this Contract shall be in writing and shall be deemed delivered when delivered in person or on the third day after being deposited in the United States mail, postage paid, addressed as follows:

Employer:

Company

[INSERT NAME OF COMPANY REPRESENTATIVE]

[INSERT TITLE]

[INSERT COMPANY ADDRESS]

[INSERT CITY], _________________ [POSTAL CODE]

Employee:

Employee

[EMPLOYEE'S ADDRESS]

[CITY], _________________ [POSTAL CODE]

Such addresses may be changed from time to time by either party by providing written notice in the manner set forth above.

23. ENTIRE AGREEMENT. This Contract contains the entire agreement of the parties and there are no other promises or conditions in any other agreement whether oral or written. This Contract supersedes any prior written or oral agreements between the parties.

24. AMENDMENT. This Contract may be modified or amended, if the amendment is made in writing and is signed by both parties.

25. SEVERABILITY. If any provisions of this Contract shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid or enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

26. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any provision of this Contract shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Contract.

27. APPLICABLE LAW. This Contract shall be governed by the laws of the State of _________________.

28. SIGNATORIES. This Contract shall be signed by [NAME OF COMPANY REPRESENTATIVE], [INSERT TITLE] on behalf of Company and by Employee in an individual capacity. This Contract is effective as of the date first above written.

___________________________________

[NAME OF COMPANY REPRESENTATIVE], [INSERT TITLE]

Company

Date: ______________________

__________________________________

Employee

Date: ______________________


Explanatory Notes

Here are some notes and explanations about a few of the most important paragraphs of the Employment Agreement.

  1. Employment. This paragraph allows you to specify the employee’s job title and responsibilities. You can be as specific as you like about the employees’ job duties – just add additional paragraphs to spell out specific responsibilities.
  2. Social media content and contacts. In the modern workplace it’s common for employees create social media content for their employers. It’s important to spell out that the content and contacts created in this process belong specifically to the Company, and not the employee.
  3. Compensation. This paragraph allows for some flexibility in the amount and type of compensation the employee receives. You should choose a rate to pay the employee (hourly, monthly, or yearly) as well as a payment schedule (every two weeks, on specific days, etc.) Choose whichever option applies to the employee and delete the remainder of the text.
  4. Expense reimbursement. This document handles expenses through reimbursement to the employee. It’s important to note that only those expenses incurred according to established company policy will be repaid. If your company does not have a policy surrounding expenses incurred by employees it’s important to create one.
  5. Confidentiality. It’s likely your employee will be exposed to sensitive company information and the employment contract contains strong protections for your confidential company information. Paragraph 9 "Confidentiality After Termination" is important as well to protect your confidential information after an employee has left the company. Be sure to fill in the number of years you want to protect information after an employee is terminated.
  6. Non-Competition. Paragraph 10 allows the employer to limit the employees ability to work for a competing company for a certain period of time and within a specific geography. Be careful to be reasonable in the length and scope of the non-compete because courts may invalidate overly restrictive non-compete clauses.
  7. Vacation. If you will provide paid vacation for employees paragraph 12 can control the number of days per year the company will provide. This paragraph is also subject to the terms of the company’s established vacation policies which may change from time to time. If you do not have a written vacation policy for employees, and want to grant this benefit, you should create a vacation policy.
  8. Sick Leave. If you want to grant sick leave to employees the language in paragraph 13 may be used to provide that benefit. May sure to specify how many months need to pass before the employee qualifies for the benefit and then the number of hours or days of sick leave the employee will accrue per year. There is also optional language to allow a benefit whereby the employee can convert unused sick leave or vacation time to cash.
  9. Personal Leave. The same options are available for Personal Leave if you wish to implement that benefit for the company. See also the optional language that may allow the employee to convert unused Personal Leave to cash.
  10. Optional paragraph – Insurance Benefits. If you choose to provide insurance benefits to your employees you may use this language to spell out what benefits are provided (at a high level) and any waiting period you may want before benefits are provided.
  11. Optional paragraph - Other Benefits. Beyond insurance you may want to provide other benefits to employees. Examples might include: health clubs, day care, etc.
  12. Termination. It’s important to understand that employment under this agreement is "at will", meaning that the company (or the employee) may terminate the agreement at any time. The paragraph provides the employee severance of two weeks pay if the employee provides fourteen (14) days written notice of termination.
  13. Termination for disability. If the employee becomes disabled for a sufficient amount of time.


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