Employment Contract Template Guide for SMBs & HR

Download the Free Employment Contract Template

Need a solid starting point you can trust? Download a clean, attorney-reviewed employment contract template and edit it in minutes for your open role and location. In most cases, a clear template speeds approvals and reduces back-and-forth with candidates.

Get a trustworthy employment contract template you can edit in minutes. It includes standard clauses most SMBs need plus placeholders for state addenda, remote work, and variable pay. Use it as your master “employment contract sample,” then duplicate per role to avoid version drift and errors.

• Download: [Employment Contract Word] | [Employment Contract PDF] | [Google Docs Copy]
• Also available:
• at-will employment agreement
• fixed-term employment contract template
• part-time employment contract template
• internship agreement template
• executive employment agreement template

Formats available: Word, Google Docs, PDF

Choosing the right file type saves time during review and signing. Pick the format that fits how your team edits, collaborates, and executes offers. Move candidates from verbal to signed quickly and consistently.

• Word: full editing control and track changes
• Google Docs: easy collaboration and comments
• PDF: final, non-editable signature-ready pack

Tip: Keep a master “employment contract sample” and duplicate it per role so you don’t introduce errors.

Who this template is for (SMBs, HR, founders)

If you’re an SMB owner, HR generalist, or first-time hiring manager, this template helps you move fast without missing essentials. It uses plain-English terms and assumes at-will employment by default. Optional sections can be turned on for fixed-term or executive roles.

This employee contract template is built for time-pressed US SMB owners, HR generalists, and first-time hiring managers. It assumes plain-English terms and at-will employment by default. It also includes optional sections for fixed-term or executive roles. It’s not a substitute for legal advice. Laws vary by state and country, so use the addendum notes below when hiring across jurisdictions.

What Is an Employment Contract? (Plain-English Definition)

When you want clarity on duties, pay, and protections, an employment contract puts the agreement in writing. In the US, most employment is at-will. Either party can end the relationship anytime for any lawful reason, but a contract sets expectations and reduces misunderstandings.

An employment contract (also called an employment agreement) is a legally binding document between an employer and an employee. It defines the job, pay, benefits, policies, and the terms that control the relationship. Most US employment is “at-will,” but a written contract clarifies expectations and reduces disputes.

Use it to lock down duties, compensation, confidentiality, IP ownership, termination rules, and what happens if there’s a disagreement.

For example:

• An engineer’s agreement should include IP assignment and inventions provisions.
• A salesperson’s should spell out commissions and chargebacks.

Bottom line: the contract memorializes the deal and sets guardrails if things go sideways.

What to Include in an Employment Contract (Checklist)

Not sure what belongs in a standard agreement? A clear structure makes reviews faster and improves enforceability across common scenarios. Generally, you’ll cover business terms up front, protective clauses in the middle, and brief “boilerplate” at the end.

A clear structure speeds reviews and improves enforceability. Most agreements include core business terms, protective clauses, and a short set of “legal boilerplate.”

• Parties, position, duties, start date, location, schedule
• Compensation and benefits (base, overtime, bonuses, equity)
• Confidentiality, IP assignment, and data security
• Restrictive covenants (non-solicit; non-compete where lawful)
• Leave/paid time off and applicable local requirements
• Termination, severance, return of property, notice obligations
• Dispute resolution, governing law, venue, and e-signature validity

Essentials: parties, role, start date, duties, location, hours

Start here to anchor the entire agreement. Identify the employer and employee by legal name. Specify title, reporting line, start date, work location, and standard schedule. Note whether the role is remote, hybrid, or on-site.

Give practical specifics to prevent confusion later. For example, “Senior Account Executive reporting to VP Sales; territory: Northeast; travel up to 25%.” If duties may evolve, add a line noting they may reasonably change to meet business needs while staying consistent with classification. Clear duty summaries also support performance management and FLSA exemption analysis. This section sets the foundation for compensation, leave, and termination terms to follow.

Compensation and benefits (exempt vs non-exempt, overtime, bonuses)

Pay terms must align with wage-and-hour rules. State whether the role is exempt or non-exempt under the FLSA and applicable state law. Non-exempt employees earn overtime after statutory thresholds.

List base salary or hourly rate, pay frequency, and eligibility for bonuses, commissions, or equity so there’s no guesswork.

• Define how bonuses or commissions are calculated, when they vest, and what happens on termination.
• Reference benefits (health, 401(k), PTO) and point to your handbook or benefits summary for details.

Example: “Non-exempt at $28/hour; overtime at 1.5x for hours over 40/week; quarterly bonus up to 10% of base, subject to active employment at payout.” Accurate, specific pay language reduces wage claims, payroll disputes, and candidate confusion. It also tees up any variable pay addenda you’ll attach next.

Confidentiality and IP assignment (inventions, BYOD, post-employment)

Protecting information and ownership is non-negotiable. A confidentiality clause should cover trade secrets and sensitive business data during and after employment. An IP assignment clause should transfer to the employer any work created within the scope of duties or using company resources.

Address modern realities like BYOD, remote access, and off-hours tinkering. Clarify approved tools, MFA/VPN requirements, and the process for returning or wiping devices and accounts on separation.

For example, require employees to protect credentials and prohibit storing company data in personal cloud apps. Strong confidentiality and IP terms are broadly enforceable, with narrow carve-outs in some states for off-hours inventions made without company resources (e.g., California Labor Code §2870). This section pairs tightly with your restrictive covenants and offboarding checklist.

Restrictive covenants (non-solicit, non-compete, non-disparagement)

If you need post-employment protections, choose tools that fit your state and role. Non-solicits (no poaching customers or staff) are typically more enforceable than non-competes. Many states restrict or ban non-competes, especially for lower-wage workers.

Tailor duration, scope, and geography to be reasonable and necessary. Non-disparagement can be helpful but must not restrict protected rights, such as discussing workplace conditions under the NLRA. Train managers to avoid broad promises that undermine covenants. When in doubt, narrow the audience (e.g., customers the employee had material contact with) and shorten duration. Thoughtful drafting increases your odds of enforcement while minimizing friction with candidates.

Leave and time off (vacation, sick days, local requirements)

Leave rules are often driven by local laws. Spell out PTO accrual, sick leave, holidays, carryover rules, and links to your handbook where full details live. As a general rule, follow the most protective law that applies to the employee’s work location.

Give examples to make expectations concrete: “10 days PTO per calendar year, accruing per pay period; sick leave provided per [State/City] ordinance.” Note how to request time off and any blackout periods. Explain how leave coordinates with unpaid federal entitlements like FMLA if your company is covered. Clear leave terms reduce scheduling friction and help managers plan workload realistically.

Termination, severance, and notice

Even in at-will environments, exit terms deserve clarity. Define termination for cause (e.g., misconduct, fraud), without cause, and voluntary resignation. Include any notice expectations where permissible.

If you offer severance, outline eligibility, amounts, and the requirement to sign a compliant release. Add practical steps to keep offboarding smooth: final pay timing (state rules apply), return of property, access deactivation, and expense reimbursement cutoffs. Stating these mechanics up front lowers risk and helps both sides transition with fewer surprises.

Dispute resolution, governing law, and venue

Decide in advance where and how disputes will be resolved. Many employers choose governing law and venue where they operate or where the employee works. Pick a forum with a clear connection to the employment.

Arbitration can be faster and private but comes with evolving legal constraints. This is especially true around collective actions and state-specific rules. If you require mediation first, spell it out. Include fee allocations and any injunctive relief carveouts (e.g., for confidentiality/IP). Review this clause periodically to keep pace with your jurisdiction’s updates.

How to Customize Your Employment Contract (Step-by-Step)

Short on time? Use this sequence to tailor the template quickly while staying compliant. Each step highlights common decision points and low-risk defaults you can adopt or adjust.

If you’re customizing across roles or states, keep a standard core. Move jurisdictional or variable-pay details to addenda. This approach gives you one master template with fewer edits to track and fewer errors to introduce.

Step 1: Choose the right type — at-will vs fixed-term vs project-based

Pick the contract type that fits your business need and risk tolerance. In the US, most roles work well with at-will agreements. Time-limited funding or seasonal needs may call for fixed terms.

• At-will employment agreement: the US default for ongoing roles. Flexible and easy to end for any lawful reason. Use for most non-union, indefinite hires.
• Fixed-term employment contract: set start/end dates, sometimes with renewal. Useful for grants, seasonal, or visa-bound roles. Include early termination rights and any buyout/severance.
• Project-based agreement: scoped to a defined project or deliverable. If you control how work is done, the worker may be an employee, not a contractor.

Trade-offs: fixed terms add certainty but can create severance risk if not drafted with clear early-exit clauses. At-will is simpler but may not fit funding-limited roles.

Step 2: Role-based edits — full-time, part-time, intern, executive

Match terms to the role’s schedule, benefits, and responsibilities. Align classification and benefits with hours and duties to avoid misclassification.

• Full-time: include benefits, PTO, and exempt/non-exempt status.
• Part-time: pro-rate benefits, address overtime if non-exempt, and set hours caps.
• Intern: specify paid vs unpaid. Most interns must be paid under FLSA unless strict criteria are met. When in doubt, pay at least minimum wage. Add supervision, learning goals, and school credit if applicable.
• Executive: add equity, bonus plans, severance triggers, change-in-control provisions, and stricter confidentiality. Consider a separate executive employment agreement template to manage complexity.

Always align duties and pay with classification rules. Misclassification drives costly penalties.

Step 3: Remote/hybrid clauses — equipment, expenses, data security, location

Remote and hybrid work add tax, payroll, and IT wrinkles you should address up front. Name where the employee will work and what tools they’ll use to do it securely.

• Location of work: specify home address, time zone, and any in-office days.
• Equipment and expenses: who provides laptops/phones; what reimbursement policy applies. Several states mandate reimbursement for necessary business expenses.
• Data security: approved tools, VPN/MFA, no public Wi-Fi, device encryption, and offboarding data return/wipe.
• Cross-state work: tax withholding, minimum wage, paid sick leave, and leave laws generally follow the employee’s work location. Use a state addendum when hiring out-of-state.

These terms reduce IT risk and payroll surprises for distributed teams.

Step 4: Variable pay and equity — commissions, options/RSUs, clawbacks

Variable pay can motivate performance—but only if the rules are clear. Define exactly how commissions, bonuses, and equity vest, pay out, and unwind on returns or termination.

• Commissions: define “earned,” when payable, clawbacks for returns, and proration on termination. Attach a commission plan addendum employers can update annually.
• Bonuses: discretionary vs formula-based, payout timing, and conditions.
• Equity: reference the stock plan and grant agreement (options vs RSUs), vesting schedule, acceleration, and forfeiture.
• Clawbacks: align with your policy and any SEC/stock exchange rules if applicable.

Clear mechanics prevent compensation disputes and protect margins.

Step 5: Finalize and sign — e-sign validity, countersignature, effective date

A clean signature process signals professionalism and supports enforceability. Confirm any state-specific addenda, then execute with a compliant e-signature system that preserves an audit trail.

• Review state addenda needs (non-compete limits, expense reimbursement, leave rules).
• Validate e-sign: the ESIGN Act and UETA generally recognize e-signatures. Keep an audit trail with signer identity, IP, timestamps, and final PDF.
• Countersign and deliver a fully executed copy before the start date.
• Store in your HRIS with reminders for probation reviews, equity vesting, and plan renewals.

A clean execution process signals professionalism and improves enforceability.

Copy-and-Paste Clause Library (With Notes and When to Use)

Want plug-and-play language you can trust? Use these vetted samples, then tailor for the role, state, and your policies. Generally applicable clauses are fine to start, but add required state notices or carveouts where laws differ.

Below are sample clauses you can paste into the employment agreement template. Edit for role, state, and pay plans.

Sample confidentiality clause (with tailoring notes)

“Employee shall not, during or after employment, use or disclose any Confidential Information of the Company except as required to perform duties. ‘Confidential Information’ includes non-public information such as customer lists, pricing, financial data, product roadmaps, source code, trade secrets, and security credentials. Upon termination, Employee will promptly return or permanently delete all Company materials and certify compliance.”

Use for all roles. Adjust examples to your industry and add carveouts for information that is public, independently developed, or lawfully required to be disclosed.

Sample IP assignment clause (employee inventions)

“All right, title, and interest in Inventions that Employee conceives, develops, or reduces to practice during employment and within the scope of duties, or using Company equipment, supplies, or Confidential Information, shall be the exclusive property of the Company. Employee agrees to execute documents and assist in obtaining patents and other protections.”

Add a state-specific inventions notice where required (e.g., California) for off-hours inventions made without company resources.

Sample termination clause (cause, without cause, notice)

“This is an at-will employment relationship and may be terminated by either party at any time for any lawful reason. The Company may terminate for Cause, including gross misconduct, material policy violations, fraud, or willful refusal to perform duties, effective immediately. The Company may terminate without Cause with no advance notice. Upon termination, final wages will be paid in accordance with applicable law.”

If offering severance, add a short severance paragraph and reference a release agreement compliant with federal/state law.

Sample non-solicit clause (safer alternative to non-compete)

“For twelve (12) months following termination, Employee will not, directly or indirectly, solicit business from, or attempt to divert, any customer or prospective customer with whom Employee had material contact in the last twelve (12) months of employment, for products or services competitive with the Company. Employee will not solicit Company employees to leave their employment.”

Limit the audience and duration to what the role justifies. Check your state’s restrictions and thresholds.

Jurisdiction Tips (US States and International Considerations)

Hiring across borders or state lines? You’ll need to align core terms with local, mandatory laws while keeping your template standard. Generally, employees receive the most protective law that applies to their work location, so build in state addenda and country-specific terms where needed.

Laws that affect employment contracts vary widely. Use a state addendum for wage-and-hour, leave, reimbursement, and restrictive covenants. For cross-border hires, get local counsel to avoid accidental violations.

United States: when to add a state addendum; key variations to watch

Use a concise addendum to capture state rules without overhauling your core template. Prioritize wage-and-hour, leave, expense reimbursement, restrictive covenants, and final pay timing—areas with the biggest compliance impact.

• Minimum wage and overtime: state/city rates often exceed federal; follow the higher standard.
• Paid sick leave and family leave: required in many states/cities; mirror local accruals and usage rules.
• Expense reimbursement: mandated in states like CA and IL for necessary business expenses.
• Final pay timing: strict deadlines in several states (e.g., CA requires immediate pay at termination).
• Restrictive covenants: CA, ND, OK ban non-competes; many states limit them by salary thresholds or notice requirements.

Create a short addendum per employee location to capture these differences.

Non-compete trends and safer alternatives (2024–2025)

If you rely on non-competes, reassess now. The overall trend is away from non-competes, especially for lower-wage workers. Enforcement continues to tighten at the state level.

The trend is away from non-competes—numerous states restrict or ban them, especially for lower-wage workers. A 2024 federal rule attempting to ban most non-competes was struck down in court, leaving state law in control. Safer tools include confidentiality, invention assignment, reasonable customer non-solicits, and garden leave for limited cases. Keep durations short (6–12 months), scopes narrow, and consider consideration (e.g., a bonus) where state law expects it.

Cross-border/remote hires: choosing governing law and venue

Cross-border hiring adds mandatory protections you can’t waive. Choose governing law and venue where you have a nexus, but remember employees often receive non-waivable rights from the place they work.

Pick governing law and venue where you have a nexus, but remember employees often get mandatory protections of their work location. For Canada, the UK, and EU, local mandatory laws on notice, overtime, and holiday supersede conflicting contract terms. For privacy, add GDPR/UK GDPR language for EU/UK workers and CCPA/CPRA language for California.

Employment Contract vs Offer Letter vs NDA vs Handbook

Confused about which document to use when? Use this quick comparison to match the tool to the stage and level of protection you need. Layer documents where appropriate.

• Offer letter: high-level summary (title, start date, pay) with at-will statement; best for speed but lighter protection.
• Employment contract: the full agreement with compensation mechanics, IP, confidentiality, and termination rules.
• NDA: stand-alone confidentiality tool used with candidates, contractors, and vendors.
• Handbook: company policies and benefits; it’s not a contract and should say so.

Use an offer letter plus a separate employment agreement when you need clarity on IP, variable pay, or restrictive covenants.

Common Mistakes and Red Flags (And How to Avoid Them)

Avoiding the usual pitfalls will save time, money, and credibility. Use this checklist to tighten weak spots before you send the agreement for signature.

• Vague compensation terms for commissions/bonuses leading to disputes—attach a clear plan.
• Overbroad non-competes that are likely unenforceable—prefer non-solicit and confidentiality.
• Misclassification of non-exempt roles as exempt—apply FLSA duties and salary tests.
• Missing state addenda for remote employees—local laws usually follow the employee’s work location.
• No IP assignment or BYOD/data language—risking data loss and ownership fights.

Fix these now to prevent costly rework or claims later.

When to Involve a Lawyer (Typical Scenarios and Costs)

Some situations justify a legal check to de-risk decisions and speed approvals. As a rule, the higher the stakes (equity, executives, multi-state, unions), the more value you get from counsel.

Bring in counsel when hiring executives, issuing equity, expanding into new states or countries, handling unions or works councils, or drafting complex commission plans. Expect $500–$1,500 for a template review. Budget $1,500–$5,000 for executive or multi-state packages, depending on complexity. A brief legal review is cheaper than a wage claim or IP dispute.

FAQs

Is an employment contract legally required?

No—most US employment can be at-will without a written contract. However, a written employment agreement improves clarity, memorializes variable pay, secures IP, and reduces legal risk. Some states require written terms for specific items (e.g., wage notices). Many employers pair an offer letter with a full agreement.

Can we modify the contract after signing?

Yes, but you usually need mutual consent. In some states, you also need additional consideration (something of value beyond continued employment). Use a short written amendment signed by both parties and keep it with the original agreement. For plan changes (e.g., commissions), give advance written notice per state law and your plan documents.

Do independent contractors need a contract?

Yes—but not an employment contract. Use an independent contractor agreement that sets deliverables, payment, IP ownership, confidentiality, and status. Be careful: control over hours, tools, and methods can trigger employee status under IRS and state tests. Misclassification penalties are steep.

How long should an employment contract last?

Most SMBs use at-will agreements with no fixed end date. If you choose a fixed term (e.g., 12 months), include early termination rights and renewal mechanics. Calendar reminders for 60–90 days before end-of-term help you renegotiate or non-renew cleanly.

Related Templates and Next Steps

At-will employment agreement, independent contractor, internship, NDA

Round out your hiring toolkit so you’re not reinventing the wheel for each role. Pair this employment contract with documents that cover adjacent scenarios and variable pay.

Grab adjacent templates to round out your hiring toolkit: at-will employment agreement, independent contractor agreement, internship agreement template, NDA, commission plan addendum, and state-specific employment contract template addenda. Use them together for faster, safer onboarding.

Download the template + final pre-sign checklist

Before you hit send, run this quick pre-sign review to catch avoidable issues. Five minutes here can prevent days of rework later.

• Confirm exempt vs non-exempt status and pay accuracy (FLSA + state rules)
• Add state addendum for the employee’s work location
• Insert confidentiality, IP, and tailored non-solicit language
• Attach commission/equity plans if applicable
• Set governing law/venue, e-sign, and countersign before start date

Disclaimer: This article provides general information, not legal advice. Laws change and vary by jurisdiction. For specific guidance, consult a licensed employment attorney.

References:

• U.S. Department of Labor (FLSA): https://www.dol.gov/agencies/whd/flsa
• EEOC (anti-discrimination laws): https://www.eeoc.gov/
• IRS worker classification: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
• ESIGN Act/UETA e-sign basics: https://www.ftc.gov/business-guidance/resources/esign-law
• State labor agencies: check your state’s department of labor website for wage, leave, and reimbursement rules

Reviewed for legal accuracy as of publication; recheck non-compete and state leave rules for updates.