Free Employment Agreement

This program offers a listing of several different optional benefits to be provided to the employee, including vacation, sick leave, personal days, and holidays. In addition, the user is given the option of adding other, non-listed benefits. The program also contains language that indicates that the employee benefits may change from time to time. This allows the employer to preserve the option of changing the amount of benefits (for example, the number of vacation days) from time to time without violating the Agreement.

"Commissions" are compensation paid to an employee (e.g., a salesperson) or an independent contractor (perhaps also a salesperson). The commission is usually an amount based on the employee's results. For example, a salesperson's commission is often a percentage of the salesperson's sales volume. A commission plan should be in writing and should clearly describe any limitations on the amount of commissions that can be earned, as well as the circumstances under which commissions will be paid.

Wage payments and commission payments to employees must comply with the requirements of the Fair Labor Standards Act, a federal law regarding wages, working hours, and other employer/employee matters. For example, some types of employees must be paid at least twice per month.

In addition, many states also have their own state laws regulating minimum wage and overtime pay. In some cases, state law is more restrictive than federal law. The Employment Agreements and the employment letters in this program do not address the requirements of minimum wage or overtime law. For additional information, contact an attorney or the local office of the "wage and hour" division of the U.S. Department of Labor (or similar state agency).

If an employer expects an employee to comply with the employer's rules and regulations, it is obvious that the employer must communicate those rules and regulations to the employee. While this can be done orally, it is far preferable for the employer to provide clear written rules in the form of an employee handbook. An employee handbook explains the employer's rules and policies and how they may be changed from time to time. It is advisable to have the employee handbook reviewed by an attorney who is familiar with the employer's state and federal employment laws.

The IRS has very strict guidelines concerning whether a person providing services is an employee or an independent contractor. Frequently, businesses attempt to make their associations with workers "independent contractor" relationships so that they are not obligated to provide employee benefits or to withhold employee payroll taxes. However, the IRS often views such relationships as "employer/employee" relationships in order to assess payroll taxes against the employer. In such cases it is advisable to consult a tax expert to determine whether the Employment Agreement (for employees) should be used instead of a Consulting Agreement or a Work for Hire Agreement (for independent contractors).

If one or more of the following factors apply, there is a reasonable possibility that the IRS will view the "worker/consultant/independent contractor" as an employee:

• The worker will work only for the business (the "Company") that is hiring the worker, the relationship between the worker and the Company is continuous, or the Company integrates the worker into its business operations.
  
• The worker will be paid an hourly, weekly, or monthly wage, or the worker does not bear the risk of realizing a profit or loss.
  
• The Company will control or significantly influence the worker's working hours and/or work environment, or the worker works on the Company's premises.
  
• The Company will control or significantly influence the worker's work methods, and is not merely interested in the results of the worker's services.
  
• The Company furnishes tools and equipment required by the worker to perform the services, the Company pays for business or traveling expenses, or the worker has little or no investment in his or her independent business.
  
• The Company requires that the worker must render services personally, the Company hires, supervises, or pays assistants, or the Company determines the sequence of work to be performed.
  
• The relationship of the worker to the Company includes other factors that are similar to factors that characterize the relationship of employees to employers.

This "employee/independent contractor" issue is important for more than just tax-related issues. It also impacts employer liability. Generally, an employer can be held liable for the actions of an employee that were committed during the course and within the scope of the employment relationship. On the other hand, a business is less likely to be held liable for the actions of independent contractors.

If you have additional questions about the type of relationship created, or if you have any doubt whether a worker is an employee or independent contractor, consult with your attorney for further advice.

The Employment Agreement is an agreement between an employer and an employee that specifies the rights and obligations of each party to the agreement. Please note the following cautions:

• If the employer expects the employee to abide by the agreement, the employer must also follow the agreement.

• Do not use this document if the employee is covered by a collective bargaining agreement (that is, an agreement negotiated between a labor union and an employer).

• Lawsuits by employees against employers with respect to employment matters are increasing. Such suits are based on employment agreements as well as other matters such as injuries and discrimination. Many aspects of these lawsuits are ambiguous and uncertain because they are based on an oral contract -- the employment terms were not put into writing. Although a written agreement will not eliminate the possibility of a lawsuit, it may help to reduce that possibility because it codifies many of the terms of employment into an objective format.

• Employment laws vary from state to state and change as courts interpret the law through court decisions. This program will help clarify the employment relationship by presenting the typical issues. A lawyer should be consulted regarding any unique issues not addressed by this program.

• Employment "at will" is an important legal concept in many states, and careful attention should be given to the provision in the Employment Agreement regarding termination.

Understanding Work-for-hire, Consulting and Employment Agreements
Forms for Hiring Employees or Contractors
Common Types of Employment Forms
What to Include in an Employment Agreement
Important Facts About Non Disclosure Agreements

The Employment Agreement offers a confidentiality paragraph that obligates the employee to protect and not disclose the employer's proprietary or confidential information. "Confidential information" is information that is unique to a particular company. Disclosure of confidential information could harm the employer's business.

The confidentiality paragraph includes an option that describes the employer's rights to take action against actual or potential disclosures. Another option allows for the continuation of the confidentiality provisions after termination of employment.

Court decisions vary from state to state, but some may impose a maximum time limit regarding the time period for which the employer's information must be kept confidential. The confidentiality limitations must be "reasonable" in light of the needs and practices of the employer's business and industry.

Many employers reimburse their employees for various "out-of-pocket" expenses. For example, if the employee is required to use his or her car to carry out his or her responsibilities on behalf of the employer, the employer may reimburse the employee by making a fixed "per mile" payment. Other reimbursed expenses might include long distance phone calls, travel expenses, and education or seminar expenses.

Generally, it is preferable for an employer to retain maximum flexibility by making reimbursement "in accordance with Employer policies in effect from time to time". This allows the employer to change the reimbursement policy. However, this program also allows the option of specifying directly in the document which expenses will be reimbursed.

Generally, an employer will maintain very close control over who can sign contracts on behalf of the employer. Often this authority will be limited to key officers. In some cases, it may be convenient to allow other employees limited rights to sign contracts. For example, it may be appropriate to allow a purchasing agent to sign purchase orders. In all such cases, the employer should ensure that there are adequate internal controls to prevent misuse of that authority.

The non-compete provision is intended to provide additional protection against the possibility that the knowledge gained by the employee regarding the employer will be used in the future to compete against the employer.

However, the courts in many states view non-compete provisions as a "restraint of trade", and therefore are reluctant to enforce them. Some states, including Alabama, California, Colorado, Hawaii, Louisiana, Montana, Nevada, North Carolina, North Dakota, South Dakota, Oklahoma, Oregon, Texas, and Wisconsin have significant restrictions on the enforceability of non-compete provisions. Therefore, it is advisable to consult a lawyer to determine to what extent a non-compete provision may be enforceable in your state.

Non-compete provisions are enforceable in many states only when they are "reasonable" in terms of their effect on the parties and the general public, and where the restraint imposed is not greater than necessary to protect the company's valid business interests. Generally, for a non-compete provision to be enforceable, the employer must have a protectable business interest in specific customer or trade information.

The following guidelines are often used by courts in determining whether non-compete provisions are "reasonable", and therefore, enforceable. (1) The "time period" should be limited to the useful life of the information possessed by the employee. In many cases, this will be two to five years, but could be as short as one year, depending on how rapidly the information becomes obsolete. (2) The "geographical area" in which competition is prohibited should be limited to the specific geographical area in which the employee actually operated or about which the employee had substantial information. A determination of reasonableness will depend on the specific facts of each situation.

Employees often have helpful ideas on how to improve efficiency or make the work place more enjoyable. Employers can benefit from these ideas by encouraging employees to share these ideas. Generally, employee-generated ideas become the property of the employer if generated during the employee's course of employment. However, this result can vary from state to state and also depends on how closely related the idea is to the employee's job duties.

It is advisable to require an employee to return all employer property immediately upon termination of the employment. Any delay can lead to difficulties in recovering cars, tools, keys and important records. Continued use of these items by the now "former" employee can cause significant damages for the employer. In some cases, employees should sign a confidentiality agreement which has specific provisions regarding the return of records and other information that belongs to the employer.

1. The Employment Agreement should be signed and dated by both parties. It becomes effective as of the date inserted at the beginning of the Agreement. It is not necessary that the signatures be witnessed or notarized.

2. It is advisable to sign two copies of the Agreement so that each party will have a copy with original signatures. Original copies should be kept in a fire-proof and safe location.

3. This document should not be used if the Employee is covered by a collective bargaining agreement, if the Employee is considered to be a consultant, or if the Employee is considered to be an independent contractor.

4. A lawyer should be consulted regarding any unique issues not addressed by this program.

5. This document should be reviewed periodically to evaluate whether circumstances have changed enough to warrant changes to the Employment Agreement.

If any social media contacts are acquired by the Employer as a result of the Employee's service, it is important to specify which party will own the rights to the social media contacts. Employees use social networking on behalf of the employer to help raise the employer's profile and their online efforts may help the employer to attract contacts, including "followers" and "friends." These social media contacts may be viewed by an employer as an online client list. Since social media contacts are based on the promotion of the employer's services or business activities, the employer generally has the expectation to be the owner of these contacts. Including this provision will confirm that the employer retains ownership of social media contacts.

The termination paragraph of the Employment Agreement specifies the amount of notice that must be given if either party wishes to terminate the agreement. In addition, the amount of compensation to which the employee will be entitled (if terminated) can be stated.

This program allows the agreement to provide for employment "at will", which means that either the employer or employee can terminate the employment relationship at any time, with or without notice. Traditionally, in the absence of a written agreement governing the duration of a person's employment, an employer could terminate the employment relationship at any time, for any reason (other than a discriminatory or illegal reason) with or without notice.

While many states have severely limited or restricted the employment-at-will doctrine, this doctrine is still the law in some states. In these states, employment-at-will is still presumed unless there is an agreement establishing the duration of the employment relationship. In most states, any such agreement (for a fixed duration) must be in writing if the term of the agreement exceeds one year. Thus, if the employer wishes to have the option of terminating the employee at any time, it is essential that the employment agreement be of indefinite duration.

For more information regarding the implications of an employer's failure to clearly maintain an employee in an "at will" status, a lawyer should be consulted. A termination by an employer should be conducted under the advice of a lawyer familiar with the facts. A termination that is handled inappropriately can provide the basis for a discrimination or other employment lawsuit.

This program offers many different options regarding benefits to be provided to the employee, including provisions regarding vacation, sick leave, holidays, and insurance benefits. You are allowed to make one of three choices regarding how you will describe these benefits in the Agreement. You can choose to (1) include a mere list of benefits titles; (2) describe in greater detail each of the benefits that will be provided; or (3) remain silent about all benefits. Under the first and second options, the program also contains language that indicates that the benefits may change from time to time. This allows the employer to preserve the option of changing the amount of benefits (for example, the number of vacation days) from time to time without violating the Agreement.

Generally, an "employee" is a person who is hired by another person or business (an "employer") for a wage or fixed payment in exchange for personal services and who does not provide the services as part of an independent business. This definition can be contrasted with an "independent contractor" who is a person or entity who, as part of an independent business, becomes obligated to provide goods and/or services for a price. For example, an expert in computer systems might provide services to several businesses as a "consultant".