Employment Contracts by State

Employment laws differ across states, and those differences can shape how you hire. Some restrict background checks, while others set rules on credit use and references. Knowing your state’s limits helps you write compliant employment contracts.

What Is a Contract of Employment?

An employment contract sets out the terms between an employer and an employee, explaining what each side expects and agrees to. It usually includes details about the job and how it will be managed. Most contracts include:

Job scope and pay outline the employee’s duties and how they’ll be compensated.
Key conditions detail hours, benefits, and terms for ending employment.

An employee contract of employment can be written or verbal, but having it in writing offers stronger protection. It clearly defines pay, duties, and expectations, giving both sides legal support if something changes later.

A written contract also builds trust, promotes accountability, and helps maintain fair workplace standards. You can create yours quickly with an employment contract template from LegalTemplates.

Yes. Once both sides sign, the contract becomes legally binding. Both must follow the terms and comply with state and federal laws. If something doesn’t read right or feels unclear, it’s worth having an attorney look it over before you sign.

Types of Employment Contracts

Employment contracts come in different forms based on the job and the terms of work. Knowing the main types helps you choose the right one for your situation.

Independent Contractor

Define project-based work for self-employed professionals

Freelance

Hire temporary or seasonal staff, with clear terms on pay and set duration until the contract's end

Fixed-Term

Establish expectations and responsibilities for interns

Internship

Specify duties, rights, and expectations for part-time staff

Part-Time

Detail ongoing employment terms until terminated

Permanent

Assign project tasks to other companies or individuals as an independent contractor

Subcontractor

Define short-term employment with a set or flexible end date

Temporary

Hire staff without guaranteed working hours

Zero-Hour

Hire an at-will employee that works with no set end date

At-Will

Employment Contracts By Profession

Employment contracts look different across industries. Each profession has its own standards for pay, duties, and terms, so choose a contract that fits your field.

Hire dentists to expand your practice and serve more clients

Dentist

Define executive roles with negotiated terms and expectations

Executive

Establish staffing agreements between agencies and companies

Staffing Agency

Other Employment Forms You May Need

Depending on the situation, you may need additional employment forms to cover things like confidentiality, contract work, or ending employment on fair terms.

Restrict competition to safeguard a company’s advantage

Non-Compete Agreement

Protect confidential information by restricting disclosure

Non-Disclosure Agreement

Outline severance terms for pay and benefits after termination

Severance

How to Write an Employment Contract

Build employment contracts that work for both sides. Keep each clause clear and fair so both parties know what to expect. The sections below give you a starting point.

1. Follow Hiring and Discrimination Laws

Federal and state laws outline what employers can ask and promise. These are a few key federal rules that guide fair hiring:

To stay compliant, keep the focus on job skills and performance rather than personal traits. Avoid questions about health, religion, or family plans, and communicate job details clearly from the start. Always be honest about the role and avoid making promises you can’t keep.

Keep in mind, though, that these are just a few examples of how to make sure your employment contracts follow hiring and discrimination laws. Always check the specific federal and state rules that apply to your business before hiring.

2. Handle Background Checks and Privacy Properly

Get written consent before running a background or credit check under the Fair Credit Reporting Act (FCRA). If the report affects your hiring decision, share it and explain the applicant’s rights. Always check state laws first, since some limit how arrest or conviction records can be used. And remember, you can’t reject someone for having a bankruptcy history.

3. Classify Workers Correctly

Confirm whether the worker is an employee or an independent contractor before writing the contract. This choice affects taxes, benefits, and legal rights, so getting it right matters. Independent contractors can bring flexibility and lower costs, but misclassification can create serious legal trouble.

It happens more often than you might think. The National Employment Law Project found that 10-30% of employers misclassify their workers. One case, Chavez-Deremer v. Medical Staffing of America (2025), made the risk clear.

A staffing agency was fined $9.3 million for misclassifying over 1,000 nurses. The ruling sent a strong message. Know the rules, get advice early, and avoid taking chances with worker classification.

4. Write Clear, Fair Contracts

Before anything is signed, discuss pay, benefits, and working conditions in detail. Then decide whether the job will be at-will, exclusive, or one with specific authority. Taking time to agree on these details early keeps the relationship clear and fair. As you write, make sure to cover key details like:

Job title, duties, and pay
Employment type (full-time, part-time, temporary, or permanent)
Start date and location
Work schedule and benefits
Probation period, if there’s a trial phase
Termination process (for cause, without cause, or due to death or disability)
Resignation terms (notice period, final pay, or bonus eligibility)
Non-compete and confidentiality clauses
Ownership of work or intellectual property
Dispute resolution steps
Accommodations for religious or educational reasons

Keep the language simple and fair so both sides know what they’re agreeing to. Otherwise, unclear or one-sided clauses can lead to pay issues, unmet expectations, or even early termination disagreements.

As time passes, roles and regulations can shift, so it’s important to keep contracts current. Review them regularly and make updates when needed. For example, if a remote employee moves to another state, you may have to adjust tax details, pay structure, or work hours to stay compliant.

To simplify the process, download a Legal Templates’ employment contract template. It’ll help you build a fair, professional agreement in a fraction of the time.

Limit non-competes to a reasonable time and scope so they stay enforceable. Courts often reject overly strict terms that restrict future work. In some states, like California, non-compete clauses in employment contracts aren’t enforced at all.

How to Handle Changes in a Contract of Employment

Any change to an employment contract needs approval from both sides. Don’t adjust pay, duties, or hours without mutual consent. If major terms change, offer something in return, like a raise or a new benefit. Sometimes, continued work can count as legal consideration for an agreement, but it’s always safer to confirm any additional benefits in writing.

The process can vary depending on the contract, so check the original terms before making any updates. Once both sides agree, record the change and keep a copy.

Clear records make it easy to see what changed and when. Keeping them organized also goes a long way, and Legal Templates’ employment contract template helps you document updates in a format that’s simple to refer back to later.

What Counts as a Breach of Employment Contract?

A breach of employment contract occurs when either the employer or employee fails to meet the key terms of the agreement. This can happen when wages go unpaid, a job ends early without a valid reason, or confidentiality is broken.

Breaches usually involve written or implied employment contracts, but even at-will arrangements can be violated if promises are made in writing and not kept. When a breach happens, the affected party can seek damages to recover financial losses caused by the broken agreement.

If someone breaks the terms of an employment contract, send a breach of contract demand letter before pursuing legal action. It’s a quick, professional way to ask for payment or correction and gives the other party a chance to fix the issue.

When Is Termination of an Employment Contract Legal?

Termination is legal when it follows the terms of the contract and complies with employment law. Some agreements let either side end employment at will with notice, while others require cause or severance.

Since rules vary by state and contract type, it’s important to review the agreement before making any decision. Well-written termination clauses set out notice periods, valid reasons, and what payments apply. They help both sides end the agreement clearly and fairly.

Employment Contract Sample

Create a clear agreement that works for both sides. View the employment contract sample to see how to structure key terms. When ready, customize our employment contract template before downloading it in PDF or Word format.

This is a document preview. Your customized version will be created after you answer a few quick questions.

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