Employment Contract Templates

Table of Contents

• State-Specific Employment Contracts
• Types of Employment Contracts
• Employment Contract Sample
• What Is an Employment Contract?
• What Does an Employment Contract Include?
• How to Write an Employment Contract
• What Comes After an Employment Contract
• How Legal Templates Makes Employment Contracts Simple
• Frequently Asked Questions

State-Specific Employment Contracts

Employment laws vary by state—especially when it comes to termination, minimum wage, and leave. Use a state-specific contract to stay compliant and meet local legal requirements.

Types of Employment Contracts

Choose the right template for full-time, part-time, freelance, at-will or temporary roles.

Supporting Agreements and Forms

Add extra legal protections like NDAs, non-competes, or severance agreements to your employment contract.

Employment Contracts By Profession

Use industry-specific templates to define clear terms for unique job roles.

Employment Contract Sample

Below is an example of an employment contract template to give you a sense of what your contract will look like. You can customize this template using our document editor and download it in PDF or Word format. Create a free employment contract by taking advantage of Legal Templates’ free trial.

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What Is an Employment Contract?

An employment contract is a legal agreement between an employer and an employee. It outlines the employee’s responsibilities, job duties, and compensation and the employer’s expectations.

Before creating an employment agreement, it’s a good idea to ask the candidate for an employment verification letter to confirm their work history and income.

Our employment contract template makes it easy to draft this agreement and ensure that all important details are included.

Employment Agreement vs. Independent Contractor Agreement

An employment agreement is a contract between an employer and an employee that outlines the ongoing relationship, while an independent contractor agreement specifies the services for a specific project.

Unlike employment agreements, independent contractor agreements don’t provide benefits or require tax withholding. They focus on the scope of work, deliverables, and payment for specific tasks, helping companies manage various tax obligations and legal responsibilities.

What Does an Employment Contract Include?

An employment contract will identify the following essential elements:

• Employee Details: Identifying information for the employee, including address, phone number, email address, and any other demographic information.
• Responsibilities: Title and description of employee’s role/s and day-to-day responsibilities.
• Compensation: Amount paid per hour, week, or month, including overtime, bonus(es), commission, and the compensation schedule.
• Start Date: When the employee will start working for the employer.
• Duration of Employment: The length of time an employee agrees to work—either for a set term (e.g., 1 year) or indefinitely, with options for extension if needed.
• Benefits: Details about disability protection, health insurance, vacation, sick days, paid time off (PTO), maternity leave, and other benefits.
• Probationary Period: The employee is essentially “on trial” and may be terminated if deemed unsuitable.
• Termination: The reasons why the employment relationship may be ended.
• Work for Hire Clause: Anything created by the employee at work belongs to the company.
• Data Protection: This will give the rules and procedures regarding the company’s data privacy policies. The employer must ensure they abide by the government’s Privacy Act.
• Confidentiality: Similar to data protection sections, confidentiality sections cover how the employer plans to safeguard any employee information.

Documenting clear expectations, job responsibilities, and employment agreements allows employers to discipline and fire employees who do not meet work performance standards.

An employment contract offers legal protection to both an employee and an employer. If a dispute arises, both parties can refer to the original terms agreed to at the beginning of the working relationship.

By drafting your own employment contract today, you can avoid mistreatment and legal repercussions for both parties.

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 clauses and 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.

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.

The details should also include the employee’s job title and a description of their duties. List the employee’s work location and hours, especially if they differ from the company’s main office.

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.

3. State the Compensation

Clearly outline the employee’s salary or pay, specifying whether it’s calculated per hour, week, month, or year. Be sure to include a note stating that the employee’s pay will be subject to deductions for Social Security, federal, state, and local taxes. This helps ensure compliance with tax laws and sets clear expectations for take-home earnings.

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).

5. Highlight Expenses

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.

Example: The Employer will reimburse the Employee for the following reasonable out-of-pocket expenses incurred in furthering the Employer’s businesses: entertainment, travel, and meals. Before the Employee receives reimbursement, they must provide an itemized account of expenditures pursuant to the Employer’s policy.

6. Explain Time Off Provisions

If your workplace offers specific paid days off, such as vacation time or personal leave, include them in the contract. Your employment policies may also recognize local holidays beyond federally mandated ones.

Some states and cities have rules around overtime, sick time, and time off that fall under an employee’s rights. For example, in Nevada, private employers with 50 or more workers must provide PTO. In California, most employees who work at least 30 days a year are entitled to paid sick leave. Ensure your employment terms follow all relevant state and local laws.

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.

8. Determine Termination Protocols

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

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.

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.

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.

Frequently Asked Questions