Employment Agreement

Long Form

This Packet Includes:

1. General Instructions & Checklists

2. Information

3. Step-by-Step Instructions

3. Employment Agreement Long Form

General Instructions & Checklist

Employment Agreement – Long Form

 This package contains: (1) General Instructions and Checklist for the Employment Agreement; (2) Information about the Employment Agreement; (3) Step-by-Step Instructions and (4) the Employment Agreement.

• The Employer should review the Employment Agreement to ensure that it does not contain provisions that are not consistent with its existing rules or policies (e.g. employee manual).

• Be sure that all contract points have been discussed between the parties

 The Employer must sign the Employment Agreement.

 The Employee must sign the Employment Agreement.

 The Employment Agreement should be signed no later then when the employment begins.

 The Employer should allow the Employee a few days to review the agreement.

 Both the Employer and the Employee each retain an original signed Employment Agreement. Therefore, two original copies of the Employment Agreement should be executed (i.e. signed).

 This form should not be used if the Employee is covered by a collective bargaining agreement or union contract, if the Employee is considered a consultant, or if the Employee is considered an independent contractor.

 Laws vary from time to time and from state to state. These forms are not intended to be and are not a substitute for legal advice. These forms should only be a starting point for you and should not be used or signed before first consulting with an attorney to ensure that it addresses your particular situation. An attorney should be consulted before negotiating any document with another party.

 The purchase and use of these forms is subject to the “Disclaimers and Terms Use” found at findlegalforms.com.

Information

Employment Agreement – Long Form

An Employment Agreement is an agreement between an employer and an employee which defines the terms and conditions of the employment relationship. While an Employment Agreement can be verbal, it is always preferable to memorialize the relationship and expectations of the parties in writing.

I) What to look for in an Employment Agreement:

A well drafted Employment Agreement should accomplish the following:

1. Define the parties (employee and employer);

2. Define the term of the agreement (one year, two years, etc.) as well as including a specific start date;

3. Salary, bonuses and benefits should be included

4. Outline the employee’s responsibilities;

5. Outline the employer’s responsibilities;

6. Define what benefits the employee will receive;

7. Put limitations on the employee’s ability to compete when the employee leaves the company;

8. Protect the trade secrets and proprietary information of the company;

9. Define the ownership of the employee’s work product;

10. Set forth methods to resolve disputes; and

11. Establish that the employment is “at will” and can be terminated by either party at any time

II) Advantages

Using an Employment Agreement provides additional protection for both the employer and the employee. For the employer, the contract provides more control over the employee. Having the parameters of the job set out from the beginning will also keep the employee focused on what is expected of them. In the event it becomes necessary to terminate an employee, having the procedures set forth in the agreement will make the process smoother for all parties involved.

An Employment Agreement will protect the business if the employee will be privy to confidential information about the company. The agreement can also include a provision where the employee cannot directly compete against the company for a period of time (please note, that such non-competition provision may not be enforceable in all states).

III) At Will vs. Just Cause Employment

Employers have two possible methods of dealing with the termination of an employee, either “at-will” or “just cause.” Employment “at-will” means that the employer and employee have an arrangement where either party can terminate the agreement at any time, with or without cause. If an employer opts for this method, it is important that this type of relationship is the same one described in the Employment Agreement and also the Employee Handbook. Failure to establish this policy in writing will create confusion at the very least, and at is worst, if a dispute arises with an employee, the employer will find themselves at the mercy of the court system.

The employer should be aware if they adopt an at-will employment relationship that there are many exceptions to this rule based on public policy. Examples of this would be terminating an employee for filing a worker’s compensation claim, for filing a safety complaint with OSHA, or for serving on a jury.

On the other hand, “just cause” employment offers the employee a greater degree of job protection, assuring that as long as the employee performs adequately and is economically feasible for the employer. “Just Cause” employment means that an employee may only be terminated for a legally sufficient reason, such as misconduct or negligence.

IV) Confidentiality

A fairly standard provision of an Employment Agreement is a confidentiality clause. This language protects the employer from an employee sharing confidential information about the employer’s business with any outsider. This usually includes how the employer’s business is conducted, plans, machinery used, and financial data. Normally the confidentiality provision will last even after the termination of the employment relationship.

V) Non-competition Clause

By virtue of a non-competition clause, the employee agrees that for a period of time after their employment ends, he/she will not take a job with a competitor business. A standard clause should be for a reasonable amount of time, and cover a reasonable geographic area. Courts tend to interpret these clauses strictly, so the employee should be very clear as to what they are agreeing to. Again, please note that non-competition clauses are not enforceable in every state.

VI) Ownership of Inventions

This clause states that whatever the employee creates during the course (during standard work hours and consistent with the employer’s business) of their employment will remain the property of the company. Usually employees agree to assign their inventions to their employer and agree to keep the information confidential. This type of provision is commonly included in Employment Agreements for employees that are likely to engage in creative activities.

VII) Enforceability

Most states will enforce this type of Employment Agreement; however, most states will also require that for the agreement to be enforceable the employee must have received “consideration” for signing the document. This means that the employee must have received some gain from signing the agreement. Because of this, it is best if the employee signs the Employment Agreement at the beginning of his/her employment, then it becomes a condition of his/her employment and the gain the employee receives (the job) is obvious.

Employment relationships are governed by both federal and state law. Many of the state laws differ dramatically (e.g. some states have imposed limitations on non-compete clauses and invention assignment provisions); therefore employers and employees should become familiar with the laws of their specific state and the federal government before entering into an employment arrangement. Furthermore, before using the form you should always consult with your attorney to ensure that it addresses you specific situation.

This document should not be used with employees that are covered by a collective bargaining agreement or union contract until carefully reviewed by the employer’s counsel.

Step-by-Step Instructions

Employment Agreement – Long Form

The following instructions will walk you through each provision to help you fully understand the terms of your agreement.

Introduction: Fill in the month, day and year that the agreement is being entered into. Fill in the name of each party (the company name and the name of the Employee).

Section 1: Employment. Fill in a detailed job description for the Employee, as well as the duties that the Employee will be expected to perform. It is a good idea to be as thorough as possible in your description to avoid potential problems later.

This is an “at-will” agreement. This means that either the Employer or Employee can terminate the employment relationship at any time, with or without cause. It is important for the Employer to be very clear in their intentions creating this type of employment and include the same language in the Employee Handbook. Also be aware that there are several exceptions to this type of employment relationship which are: breach of implied contract on the part of the Employer, violations of public policy and breach of the implied covenant of good faith and fair dealing. States vary as to their interpretation of “at-will” employment so it is recommended to check the particular employment laws in your state.

Section 2: Employee Compensation/Benefits. Fill in the amount that the Employer will pay the Employee either annually or monthly (circle which applies) and the amount of compensation. Indicate whether the Employee will receive vacation or paid time off (circle which applies), and indicate how many hours will be accrued each month. This information should also be reflected in the Employee Handbook.

Include any and all benefits that will be provided to the Employee such as health and life insurance, dental and vision benefits, gym memberships, etc. If there are no benefits offered indicate so.

Section 3: Expenses. This provision states that the Employer will reimburse the Employee for any reasonable benefits incurred by the Employee. This could include items such as automobile and meal allowances. It is a good idea to have this included in your Employee Handbook so all parties are clear on what is reimbursable and to what degree.

Section 4: Conflicting Employment. A conflict of interest clause such as this is common to Employment Agreements. This assures the Employer

that the Employee’s skills, information and contacts will not be used to generate profit for another company in the same or similar business.

Section 5: Confidentiality. This clause provides a definition for confidential information and prohibits the Employee from disclosing that information. This is a standard provision in an Employment Agreement. Review the provision and if you feel that more protection is necessary, it is possible to enter into a stand alone Non-Disclosure Agreement.

Section 6: Non-Compete Agreement. Generally speaking, non-compete clauses are a way for employers to try to limit their Employees and former Employees from working for a competitor, and/or sharing trade secrets. While fairly common, there are some states that have imposed substantial restrictions on their enforceability. Always check your state rules.

Section 7: Non-Solicitation of Employees This clause prevents former employees from recruiting any of the Employer’s existing employees, causing them to work for another company. Although some states limit non-solicitation clauses, generally courts will enforce these clauses if they are reasonable and not too broad in their scope. Fill in the amount of time that you would like the clause to be in effect, bearing in mind that the time frame should be reasonable for both parties.

Section 8: Inventions.

A. Disclosures. The first paragraph provides that the Employee agrees to notify the Employer of any invention or discovery made while working for the Employer. It is standard practice that the Employer retains full ownership of all inventions or innovations particularly if the Employee’s work is creative in nature.

B Assignment/Assistance. This clause addresses what is often called pre-invention assignments. The employee is agreeing to assign an invention or innovation that may be created during their employment. Some states have laws limiting the scope of these pre-invention assignments. The laws prevent an employer from claiming ownership for an invention that was created by an employee outside the scope of their employment.

Section 9: Other Rules and Policies. The Employee agrees to abide by all rules and policies of the Employer. The Employer should go over all

company rules and policies with the Employee prior to signing this agreement.

Section10: Termination. Because this is an “at-will” agreement, employment can be terminated by either party at any time. Keep in mind that there are exceptions and limitations to this rule (see Section 1).

Section 11: Return of Property. Upon the termination of the business relationship the Employee will be required to return all business materials belonging to the Company. This may seem obvious, but without this provision, it is possible for the Company to lose valuable inventory.

Section 12: Continuing Obligations. When the employment relationship is terminated, the provisions of sections 5, 6, 7 and 8 will continue.

Section 13: Binding Effect. The terms of this agreement will bind the parties, heirs, legal representatives, successors and assigns.

Section 14: Cumulative Rights. This clause states that all the provisions work together as a cohesive agreement. One provision cannot be separated from the other.

Section 15: Waiver. Failing to enforce a particular provision of an agreement could be interpreted as waiver by conduct. In other words, failure to enforce a provision could be interpreted as giving up the right to enforce the provision in the future. This provision protects against this, stating that failure to enforce a provision does not prevent a party from enforcing the provision in the future.

Section 16: Severability. This severability clause serves to preserve the agreement should a portion of it ever be invalidated by the court. Without this clause, a finding that one provision is unenforceable would invalidate the entire agreement.

Section 17: Entire Agreement. This agreement is considered the complete agreement between the parties. Any prior agreements are invalid. If either party chooses to modify this agreement in any way, the modification must be put in writing.

Section 18: Notice. Any notice to either party must be in writing and mailed to the addresses that you will fill in here. When sending legal notice to the other party, always keep a copy of what is being sent.

Section 19: Governing Law. This is the state whose laws you wish to be used to interpret the agreement. Generally, this will be the state where you are doing business or employed.

Signature Blocks: Each party should sign and date two original agreements. Each party should retain an original for their reference.

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