Employment Contract Template

Table of Contents

• What Is an Employment Contract?
• Choosing the Right Employment Contract for Your State
• Which Contract Is Right for Each Employee Type?
• What Contract Terms Can Employment Agreements Have?
• What Employment Contracts Are Necessary for Specific Professions?
• Employment Agreement vs. Independent Contractor Agreement
• What to Do Before Creating an Employment Contract
• How to Write an Employment Contract
• Additional Clauses in an Employment Contract
• What Comes After an Employment Contract
• How Legal Templates Makes Employment Contracts Simple
• Employment Contract Sample
• Frequently Asked Questions

What Is an Employment Contract?

An employment contract records an employee-employer arrangement. It explains that an employee will serve a role for an employer under pre-established conditions. This document may also be called an “employment agreement” or a “hiring agreement.”

It’s not just a formality. An employment contract helps make a workplace more efficient, fair, and legally secure. It clearly outlines responsibilities to prevent misunderstandings about what the job entails. It also offers a clear reference point in case disputes arise over job terms.

Using an employment contract helps assure employees. It clarifies their compensation, job duration, and protections against sudden termination. It’s also useful for employers, as they can set the right tone for the job, establish expectations, and build trust from the start.

Choosing the Right Employment Contract for Your State

Employment laws vary across the US, so it’s essential to use a contract that meets your state’s requirements. Explore our list of 51 state-specific contracts to ensure compliance with local labor laws and protect your business.

Which Contract Is Right for Each Employee Type?

Sometimes, businesses need to hire different types of employees, such as full-time staff, freelancers, or interns. The right contract for each role must clearly outline expectations and legal obligations. We design our templates to meet these needs, providing clarity and protection for everyone involved.

What Contract Terms Can Employment Agreements Have?

Some industries need specific clauses to protect employers and employees. These include NDAs, non-compete clauses, at-will terms, or severance agreements. Using clear legal language is key to creating mutual understanding. Check out our templates with these essential terms built in.

What Employment Contracts Are Necessary for Specific Professions?

Some jobs require special contracts to ensure both sides understand the terms. For example, executives often need tailored agreements that explain their pay and benefits. Similarly, staffing agency workers require contracts that show they work for the agency, not the job site. These clear contracts help avoid confusion and set the right expectations.

Employment Agreement vs. Independent Contractor Agreement

An employment contract establishes an ongoing relationship between an employer and an employee. Meanwhile, an independent contractor agreement defines the services provided and requirements for one project.

Unlike employment agreements, independent contractor agreements do not offer employee benefits or require tax withholding by the employer. Instead, they define the scope of work, deliverables, and the agreed-upon payment for specific tasks.

These distinctions help companies manage the different tax obligations, legal responsibilities, and expectations tied to independent contractors and employees.

What to Do Before Creating an Employment Contract

Before drawing up a contract, employers must find and select the right employee.

1. Write your job listing, ensuring it follows state requirements for pay rates and essential job functions.
2. Ensure the job description aligns with the company’s needs and the role’s expectations.
3. Post the job listing across various platforms to collect applications.
4. Review all applications and select the best candidates for your open position.
5. Interview the top applicants and conduct follow-up interviews if necessary.
6. Ask applicants to complete an employment verification letter to confirm previous employment.
7. Prepare an offer letter summarizing the terms of employment in the contract.
8. Complete the contract and note any agreed-upon changes.

How to Write an Employment Contract

A strong employment contract sets clear expectations and establishes a productive relationship. Here are the steps to ensure your contract is comprehensive, fair, and legally sound.

1. Provide Initial Party & Job Details

The initial details contain the employee’s and company’s names. You can also include the date you’re signing the agreement. You may need to note if the contract is created in one state while the employee will be working in another.

Example: This Employment Agreement is made on this 20th day of January 2025, between Michael Dane (“Employee”) and Stanton & Hill, Inc. (“Employer”).

The details should also include the employee’s job title and a description of their duties.

Example: As a Food Stylist, the Employee shall have the following duties:

• arrange and style food for photo and video shoots, ensuring dishes look camera-ready
• collaborate with chefs, photographers, and marketing teams to create eye-catching visuals
• use creative techniques to make food appear fresh and appetizing
• research food trends and develop styling ideas to keep visuals on-brand and modern

2. Determine Employment Length

In this section, you explain whether the employment will end on a certain date.

You can also state if there is a probationary period and how long it will be. Most probationary periods last 90 to 180 days. This time allows the employer to evaluate the employee’s skills and performance to decide whether they should stay on the team.

Example: The Employee’s employment under this Agreement shall begin on January 20, 2025, and be on an “at will” basis. The Employee’s probation period shall be 90 days, starting from the first day of the Employee’s employment. If the Employee fails to pass the probation period, the Employer may terminate this Agreement immediately by giving notice to the Employee.

3. State the Compensation

State the pay amount and whether it’s per hour, week, month, or year. Include a note about deducting Social Security, federal, state, and local taxes. This helps ensure tax law compliance.

Example: The Employer will pay the Employee $32 per hour once a week as compensation for the services provided under this Agreement.

4. Explain Overtime Pay & Additional Compensation

Compensation should also include overtime, commission, and other compensation. Be specific when listing these extra compensation types. For example, you should specify the overtime amount and whether it’s based on hours worked in a day or a week. You can also explain if the employee will get a commission for the services they perform (e.g., 20% of all sales completed).

Example: The employee shall receive overtime compensation of $3.00/hr for each hour worked beyond 40 hours in a week.

5. Highlight Expenses & Work Location

If your employee has work expenses, state whether the company will reimburse them and explain the process for repayment. This is common for employees who travel or attend business meetings.

List the employee’s work location and hours, especially if they differ from the company’s main office. For remote or off-site workers, include their work address here.

Example: The Employee will primarily perform their employment duties at the company’s headquarters, located at 41939 Isabella Court, Columbus, Ohio, between 8 AM and 4 PM.

6. Explain Time Off Provisions

If your workplace has specific paid days off, include them in your contract. Your workplace may take local holidays other than the federally mandated holidays.

Some states and cities have rules about overtime, sick time, and PTO. For example, in Nevada, private employers with 50 or more workers must provide PTO. In California, most employees who work at least 30 days in a year must receive paid sick leave. Ensure your employment contract follows state and local laws.

Example: The Employee shall be entitled to 15 days of paid time off per year. The Employee will not receive paid sick or personal leave.

7. Provide Disability Provisions

Some states offer temporary disability payments through state programs if an employee can’t work due to illness or injury. An employment contract should explain how to qualify for these benefits. It should also state if the employer will provide extra support during the employee’s leave.

Employers usually don’t have to provide disability insurance but can offer it as a benefit. If your state has a disability program, let employees know their rights and how to file claims. You can also explain if employees can work part-time or take a different role while on disability leave.

Employees may get reduced pay during disability leave, so check your state’s exact rules for details.

Example: If the Employee cannot perform assigned duties because of incapacity for more than 15 days, compensation due during such capacity will be reduced by 30%.

8. Determine Termination Protocols

State how much notice you and the employee must provide before ending the job. You can also add a rule requiring notice if you terminate the employee without cause.

Example: The Employer may terminate the Employee’s employment at any time and for any reason in accordance with applicable labor laws. The Employee may terminate this Agreement at any time by giving 14 days’ written notice.

9. Decide on Severance

Decide if an employee who is terminated without cause will receive severance pay. Clearly state the amount and any included benefits.

This section should include a requirement for the employee to return any company property. You can also decide if you will release the employee from confidentiality and non-disclosure agreements upon separation.

Example: If the Employee’s employment is terminated other than for cause, the Employee shall receive severance in the amount of one month’s salary.

At the time of termination, the Employee agrees to return all the Employer property, including but not limited to computers, cellphones, and any other electronic devices. The Employee shall reimburse the Employer for any damaged property in an amount equal to the property’s market price.

10. Write Miscellaneous Terms

If there are other terms to include, list them at the end of the contract. These could cover attorney fees for litigation, the choice of arbitration or mediation, and where legal disputes will be handled.

Additional Clauses in an Employment Contract

Some employers, especially in fields like intellectual property and software, may need restrictive clauses in their contracts. These clauses help protect sensitive details and explain employees’ roles in protecting the company’s competitive edge.

Employers should get legal advice before adding these clauses. Some states, like California, Montana, Oklahoma, and North Dakota, have limits or bans on non-compete agreements. Even though the FTC’s nationwide ban on non-competes didn’t pass, many states have similar rules.

Here are three common types of restrictive clauses:

• Non-Disclosure Clause: Prevents employees from sharing trade secrets, client lists, and other confidential information.
• Non-Compete Clause: Prohibits employees from working for a competing company or establishing a competing business once they leave the employer.
• Non-Solicitation Clause: Stops employees from recruiting former fellow employees to join them when they leave the company or taking clients with them to a new employer.

You can add these clauses directly to the employment contract or create separate agreements.

What Comes After an Employment Contract

After hiring an employee, the next step is onboarding. Along with the employment contract, there are other important forms to complete. These keep your business compliant and help your new hires settle into their roles.

• IRS Form W-4: Lets you withhold the correct amount of federal income taxes for your employee.
• IRS Form I-9: Helps you identify an employee and verify their eligibility for hire.
• Employee Handbook: Informs your new employee of the company’s policies, procedures, and expectations.
• Direct Deposit Authorization: Collects an employee’s bank information so you can issue payment.

How Legal Templates Makes Employment Contracts Simple

Creating an employment contract with Legal Templates is seamless. Our document builder provides templates tailored to your state’s laws for guaranteed compliance. It also lets you include key details like pay, benefits, and job duties. All you have to do is add your specific information, and your contract is ready.

This process saves time and lowers legal risks, allowing you to focus on running your business and building a great workplace. Let us take care of the legalities so you can focus on helping your business succeed.

Employment Contract Sample

View an example of an employment contract template below. When you’re ready, you can complete yours with our document builder.

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Frequently Asked Questions