An employment contract is between an employer and the employee being hired to perform a service in exchange for payment. An employee’s pay, benefits, and other terms of employment are negotiated between the parties during the hiring process. After hiring, workers are commonly considered ‘W-2 employees’ and have their payroll taxes withheld from compensation.
At-Will Employment Agreement – No time-period commitment by the employer. May terminate at any time with or without severance.
Independent Contractor Agreement – Classified by the IRS as a 1099 Employee, is an individual or entity that is paid to perform a service. Examples include contractors, medical professionals, attorneys, etc.
Internship Agreement – When hiring an unpaid intern that agrees to work for on-the-job training related to their field of study.
Non-Compete Agreement – Depending on the restrictions, it does not allow an employee to work for a competitor or in the same industry as the employer.
Non-Disclosure Agreement (NDA) – Requires an individual or business to keep information that was learned from the employer confidential.
Subcontractor Agreement – Made between a contractor and a subcontractor. When a contractor has made an agreement with an individual or company they will then use a subcontractor agreement to satisfy portions of the original agreement by hiring other known specialists.
An employee contract is between an employer willing to pay an individual for their services. The employer can choose to pay the employee per hour or on a salary (annual basis). The employee is required to uphold their duties and responsibilities for the duration of the contract.
The following documents are required for USA companies hiring citizens and residents:
An employment contract is made up of different stipulations. Upon signing the agreement — as long as the provisions and clauses are within the bounds of the law — the contract is effective. It’s important for both employers and employees to know what rules to which they’re bound during someone’s employment term.
Duties: The employee’s title and main duties bind the worker to carry out the duties within the contract. Adding clauses that suggest that the duties could change over time always pads a contract with flexibility.
Compensation: Compensation sets the starting wage that the employee will be paid and is typically categorized into salary (yearly pay) or hourly pay, as well as how often the employee will be paid.
Termination: Some employment contracts are not longstanding, and some have an end date. Some renew yearly. The termination date of the contract would be listed in these cases, but in the case of at-will employment, the termination section might be where
Non-Compete: Employers have the option to include a non-compete clause for a set timeline, which would prevent workers from bringing trade secrets to competing organizations. With a stringent non-compete, employees that leave might not be able to work for employees in similar industries.
Trial Period: Also known as the ‘probationary period’, and is when a new employee is hired on a no-commitment basis for a set time, after which the employer will have the choice of either terminating or retaining the employee. If the employee is retained, employer benefits like healthcare and more typically begin.
Benefits: Benefits like health insurance, PTO, sick leave, and any other extras that the company provides the employee in addition to their salary should be listed.
The main difference is an employee has Federal and State withholding taken from their pay by the employer while an independent contractor is responsible for payment of their own taxes to Federal and State authorities.
Almost every employee that is part of an organization’s staff is employed “at will”, except those in the state of Montana. At-will employment is a type of employment where either the employee or the employer may terminate employment at any time, but the employer may not do so for any illegal reason.
Pursuant to 5 U.S.C. 2302(b), workplaces are subject to federal employment and hiring discrimination laws. Employees and applicants may not be discriminated against on the basis of:
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Before writing an employment agreement hiring parties should meet to discuss main employment terms such as hourly pay/salary, job title, and responsibilities. The agreement will typically be written under the company policy which governs vacation time, personal leave, and benefits.
If the employer is looking to acquire talent from another company it is best to use social networks and contact them privately. However, if an employer is looking for top-level or specialized talent, a recruiting agency, though expensive, might be a better solution that spending countless hours searching for candidates.
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The employer will likely receive a high number of applications and letters from potential candidates interested in the position. They will have to filter the candidates that they believe will be the best fit for the organization by their qualifications. It is against the law for employers to discriminate against applicants.
Before any commitments are made, it’s best to have a conversation with multiple candidates to evaluate their strengths and weaknesses. It is also a good idea for the employer to have pre-written questions that explore not only the candidate’s job qualifications, but also how they would react if put in particular situations in the workplace.
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Before any negotiations take place the employer should perform a criminal background check on the individual. Even though a person may be qualified for a job, he or she may have past convictions that will give an employer an idea of any violent or unlawful history
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The employer and employee should negotiate and agree to the following:
If the employer is a larger company, many of the above-listed items will be located in the employee handbook. Otherwise, the employer and employee will be responsible for negotiating their terms respectively.
After the initial negotiations are complete, the employer will authorize a job offer letter that includes the terms of employment.
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After completing, both parties are advised to take the document to their respective legal counsel. If the employee and employer agree to the terms of the agreement, it is time to sign.
Notary Public – It is highly recommended for executive positions that the form is signed in the presence of a notary public. A form that is notarized represents that the parties displayed government-issued identification before authorization.
After hiring, the employer will need to have the employee complete and sign the following documents:
The federal minimum wage in the United States, under 29 U.S. Code § 206(a)(c), is $7.25 per hour. In most states, the minimum wage is higher.
Minimum Wage ($/hr)
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(1) Employment Effective Date. The first calendar date when this contract becomes active should be recorded as part of this document’s introduction.
(2) Employer Name. The full name of the Employer is required for this contract to be effective. In many cases, the Employer will be a formal Business Entity such as an LLC (Limited Liability Company) or a Corporation. It is important that any suffix needed to reproduce the official name of the Employing Entity must be included in this presentation. If the Employer is a Private Party (i.e. a Contractor or Freelancer), then make sure the legal name of the Employer is reported.
(3) Job Title. Document the name of the position the Employee will occupy as it is reported in the Employer’s roster of departments, positions, or official functions.
(4) Employee Duties. The tasks the Employer will expect the Employee to perform when filling the position he or she is being hired and paid to occupy should be provided to this article. It is recommended that some detail to this description is included. For instance, the functions, tasks, and/or position requirements listed in the original job posting may be used or further explained.
(5) At-Will Employment. It is important that the term of the concerned Employee is defined. If the Employer and Employee have decided that either may terminate this agreement as needed, then select the checkbox statement labeled “At-Will.” This will mean that the Employee may terminate this contract, or the Employer may terminate the Employee’s position whenever needed provided, that they adhere to the requirements set in this paperwork.
Dentist Employment Agreement – Between a dental office and a practitioner (‘dentist’).
Employment Separation Agreement – Otherwise known as a ‘settlement’ or ‘severance’ agreement, outlines the terms and conditions of an employee’s termination.
Real Estate Agent Employment Agreement – Between a real estate agency and an agent.