Small Business Employment Contracts: What You Need to Include

As a small business owner, hiring new employees can be a time-consuming and stressful process. On top of the normal job postings and interviews, you also need to create employment contracts for your new hires. These documents lay out the terms and conditions of employment, protecting both parties and ensuring fair treatment. However, drafting a comprehensive contract can be difficult, especially if you’re new to running a business. In this blog post, we’ll go over what you need to include in small business employment contracts.

1. Introduction

The first section of your employment contract should introduce the employer and the employee. This should include the full legal names of both parties, the date the contract is signed, and the start date of employment. You should also include a brief summary of the employee’s job title and responsibilities, as well as any conditions of employment.

2. Compensation and Benefits

The next section of your employment contract should detail the employee’s compensation and benefits. This includes their hourly or salary wage, the number of hours they’re expected to work each week, and any bonuses or commissions they may be eligible for. You should also include information about the employee’s benefits package, such as health insurance, retirement plans, and vacation time.

3. Termination and Resignation

Both employers and employees need to know their rights and responsibilities when it comes to termination and resignation. Your employment contract should outline the grounds for termination and the proper procedures for ending employment. This includes notice periods, severance pay, and unemployment benefits. You should also include information about resignation, such as the proper procedures for giving notice.

4. Confidentiality and Non-Disclosure

Many small businesses deal with sensitive information and proprietary data. To protect your business, you’ll want to include a confidentiality and non-disclosure agreement in your employment contracts. This section specifies that the employee will not divulge any confidential information or trade secrets they learn while working for the business.

5. Non-Compete and Non-Solicitation

In addition to confidentiality agreements, many small businesses also include non-compete and non-solicitation clauses in their employment contracts. These clauses prevent employees from working for competitors or poaching clients if they leave the business. It’s important to note that these clauses must be reasonable in scope and duration to be enforceable.

6. Intellectual Property Rights

If your business creates any intellectual property, such as patents or designs, you’ll want to include a section on intellectual property rights in your employment contracts. This section specifies that any work created by the employee while working for the business belongs to the business, not the employee.

7. Warranties and Representations with your Employment Contracts

In this section, both the employer and the employee make certain warranties and representations. The employer may promise to provide a safe work environment, for example, while the employee may promise to adhere to the business’s policies and procedures.

8. Governing Law

Your employment contract should specify the governing law for the agreement. This is important in case of any disputes or legal action. You’ll want to choose the law of the state where your business is located.

9. Signatures and Employment Contracts

Finally, your employment contract should include a signature page. Both the employer and the employee should sign and date the agreement to indicate that they have read and agree to the terms and conditions.

In conclusion, small business employment contracts are an essential part of hiring new employees. They protect both the employer and the employee, and help ensure a fair and transparent working relationship. If you need help drafting or revising your employment contracts, contact Thompson Law, a small business law firm in Lithia, FL. Our experienced attorneys can help you create comprehensive and enforceable contracts that meet your business’s needs.