Chapter 2: Contracts that Define Employment Relationships
Part 1: Examples of Employment Contracts
C: Employee Contracts / Employment Agreements
So you want to hire an employee — someone who can learn and grow with your business. Excellent! An employee contract (aka "employment agreement") can help prevent problems before they arise.
Let's look at some key points in this type of agreement:
- Relationship and Duties. Statement of your employee's tax classification (W2, usually) and their job duties. In a separate clause under this section, you should also account for when the employment relationship can be terminated (e.g., if an employee sexually harasses another employee).
- Non-Compete. This can limit an employee's ability to compete with you in the future (e.g., if they start their own company). We'll discuss non-compete agreements in more detail later.
- Non-Disclosure. This ensures your employee can't divulge company secrets, even after the employment relationship is terminated.
- Work for Hire. Statement that you, the employer, are the owner of the work the employee creates.
- Other Important Clauses. You may also want to include clauses that define how long the employment arrangement will last, compensation and benefits, dispute settlement, and governing law (which is especially important if your employee works remotely).
Keep in mind that every employee contract varies depending on the type of work your employees do. For an employment agreement example, check out this sample contract by Stanford Graduate School of Business.
Next: Part 1D: Examples of Employment Contracts: Non-Disclosure Agreement (NDA)