An employment contract documents the role, compensation (salary, bonus terms, equity if any), benefits and PTO, the at-will relationship (the U.S. default — either party may end employment at any time, which the contract should preserve unless a fixed term is intended), confidentiality and IP assignment, and termination/severance terms. Exempt vs. non-exempt classification under the FLSA decides overtime rights (the federal salary floor for most exempt roles sits near $58,656/year as of 2025 rulemaking, with litigation ongoing), and non-competes face the FTC's attempted ban plus state bans in California, Minnesota, Oklahoma, and North Dakota.
Free Employment Contract Template
Reviewed by the Agiled editorial teamUpdated June 2026
Most U.S. employment runs on offer letters that gesture at terms — and the gaps surface at exit: what the bonus 'target' actually promised, who owns the side...
Part of our free contract template library — 75+ agreements in Word and PDF, ready to customize and sign.
Full template text
Below is a complete employment contract template you can copy, customize, and use immediately. Replace all bracketed placeholders with the relevant details for your hire.
EMPLOYMENT CONTRACT
This Employment Contract ("Agreement") is entered into as of [Start Date], by and between:
Employer: [Employer Legal Name], a [State/Country] [corporation/LLC/partnership] with its principal place of business at [Employer Address] ("Employer"),
and
Employee: [Employee Full Legal Name], residing at [Employee Address] ("Employee").
Collectively referred to as the "Parties."
1. Position and Duties
The Employer hereby employs the Employee in the position of [Job Title] within the [Department Name] department. The Employee shall report to [Supervisor Name/Title] and perform the duties outlined in the attached job description, as well as any additional responsibilities reasonably assigned by the Employer. The Employee agrees to devote their full professional time, attention, and best efforts to the performance of these duties during working hours.
2. Term of Employment
This Agreement shall commence on [Start Date] and shall continue on an at-will basis unless otherwise specified. Either Party may terminate this Agreement in accordance with Section 11 below. If this is a fixed-term engagement, employment shall end on [End Date] unless renewed in writing by both Parties.
3. Compensation
The Employee shall receive a base salary of [Amount] per [year/month/hour], payable in accordance with the Employer's standard payroll schedule, currently [weekly/biweekly/monthly]. The Employee may also be eligible for performance-based bonuses, commissions, or profit-sharing as determined by the Employer's compensation policies. All compensation is subject to applicable tax withholdings and deductions required by law.
4. Benefits
The Employee shall be eligible to participate in the Employer's benefits programs, which may include health insurance, dental and vision coverage, retirement savings plans, paid time off, sick leave, and other benefits as described in the Employee Handbook. Eligibility for certain benefits may be subject to a waiting period or probation completion. The Employer reserves the right to modify benefits programs at any time with reasonable notice.
5. Work Schedule and Location
The Employee's standard work schedule shall be [Number] hours per week, generally [Days of the Week], from [Start Time] to [End Time]. The primary work location shall be [Office Address/Remote]. If the position includes remote or hybrid work arrangements, the specific expectations and equipment provisions are outlined in the Employer's remote-work policy. The Employer may modify the schedule or location with reasonable notice based on business needs.
6. Probation Period
The Employee shall serve a probationary period of [Number] [weeks/months] beginning on the start date. During this period, either Party may terminate the employment relationship with [Number] days' written notice. Upon successful completion of the probationary period, the Employee shall be confirmed in the role and the standard notice and termination provisions of this Agreement shall apply.
7. Confidentiality
The Employee acknowledges that during the course of employment they will have access to confidential and proprietary information of the Employer, including but not limited to trade secrets, business plans, client lists, financial data, marketing strategies, and technical know-how ("Confidential Information"). The Employee agrees not to disclose, publish, or use any Confidential Information for any purpose outside the scope of their employment, both during and after the termination of this Agreement. This obligation shall survive the termination of employment for a period of [Number] years.
8. Non-Compete and Non-Solicitation
For a period of [Number] months following termination of employment, the Employee agrees not to (a) engage in or contribute to any business that directly competes with the Employer within [Geographic Area], or (b) solicit, recruit, or hire any employee, contractor, or client of the Employer for the benefit of a competing business. The Parties acknowledge that these restrictions are reasonable in scope and duration and are necessary to protect the Employer's legitimate business interests.
9. Intellectual Property
All inventions, works of authorship, designs, software, ideas, and other intellectual property created by the Employee during the term of employment and within the scope of their duties or using the Employer's resources shall be the sole and exclusive property of the Employer. The Employee hereby assigns all rights, title, and interest in such intellectual property to the Employer and agrees to execute any documents necessary to perfect such assignment. Pre-existing intellectual property owned by the Employee prior to the start date is excluded from this clause and should be listed in an attached schedule if applicable.
10. Expense Reimbursement
The Employer shall reimburse the Employee for all reasonable and pre-approved business expenses incurred in the performance of their duties, including travel, lodging, meals, and professional development costs. Reimbursement requests must be submitted with supporting documentation within [Number] days of the expense being incurred and are subject to the Employer's expense-reimbursement policy.
11. Termination
Either Party may terminate this Agreement at any time by providing [Number] days' written notice to the other Party. The Employer may terminate the Employee immediately and without notice for cause, which includes but is not limited to: material breach of this Agreement, gross misconduct, fraud, conviction of a felony, or persistent failure to perform duties after written warning. Upon termination, the Employee shall return all company property, documents, and Confidential Information. Any accrued but unpaid compensation and benefits owed through the termination date shall be paid in accordance with applicable law.
12. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of [State/Country], without regard to its conflict-of-laws principles. Any disputes arising under or relating to this Agreement shall be resolved in the courts of [Jurisdiction], and both Parties consent to the exclusive jurisdiction of such courts.
13. Entire Agreement
This Agreement, together with any exhibits, schedules, or attachments referenced herein, constitutes the entire agreement between the Parties with respect to the subject matter hereof. It supersedes all prior negotiations, representations, warranties, commitments, offers, and agreements, whether written or oral. No amendment or modification of this Agreement shall be valid unless made in writing and signed by both Parties.
14. Severability
If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. The invalid provision shall be modified to the minimum extent necessary to make it valid and enforceable while preserving the original intent of the Parties.
IN WITNESS WHEREOF, the Parties have executed this Employment Contract as of the date first written above.
Employer:
Signature: ___________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: ___________________________
Employee:
Signature: ___________________________
Name: [Employee Full Legal Name]
Date: ___________________________
- Default status
- At-will, both directions
- Exempt salary floor
- ≈$58.7k federal (state floors higher)
- Non-competes
- Banned in CA, MN, OK, ND; FTC pressure
- IP assignment
- Written clause — state carve-outs apply
What your employment contract should cover
Position, duties, and reporting
Title, core responsibilities, reporting line, location and remote/hybrid expectations. A 'duties may change' flexibility clause is standard — but material demotions can still trigger constructive-dismissal arguments, so the flexibility has practical limits.
At-will status, preserved deliberately
Either party may end employment at any time, with or without cause — the U.S. default in every state but Montana. The contract should state it and avoid language that accidentally promises term employment ('annual salary' is fine; 'employment for one year' is a term contract).
Compensation: salary, bonus, equity
Base salary and pay cadence; bonus terms with the discretionary/formulaic distinction made honestly (a 'target bonus' with criteria reads as a promise; 'sole discretion' reads as a maybe); equity referenced to the plan documents that actually govern it.
FLSA classification
Exempt (no overtime — requires both the salary floor and a genuine duties test) or non-exempt (overtime at 1.5× after 40 hours). Misclassifying to avoid overtime is among the most expensive routine employment mistakes; titles don't decide it, duties do.
Benefits and PTO
Health, retirement, and other benefits by reference to plan documents (which control), PTO accrual and caps, and — increasingly — state-mandated paid sick leave acknowledged separately from vacation.
Confidentiality
Company information protected during and after employment, with the standard exclusions and the DTSA whistleblower-immunity notice federal law requires in employee confidentiality terms (omitting it forfeits enhanced trade-secret remedies).
IP assignment with state carve-outs
Inventions and works created in the scope of employment assigned to the company. Several states (California Labor Code §2870 among them) void assignment of inventions made entirely on personal time without company resources and outside the company's business — the clause must include the statutory carve-out where required.
Restrictive covenants, right-sized
Non-solicitation of customers and employees (12–24 months) is broadly enforceable. Non-competes are banned outright in California, Minnesota, Oklahoma, and North Dakota, restricted by salary thresholds in others (Washington, Colorado, Illinois), and under continuing FTC pressure — use them narrowly or not at all.
Termination and final-pay mechanics
Resignation notice expectations, termination for cause defined, and final-paycheck timing — several states require same-day or next-day final pay on involuntary termination. COBRA and equity-exercise windows referenced.
Severance terms (if promised)
If severance is offered, the formula (commonly 2–4 weeks per year of service, or a fixed period), the release of claims it's exchanged for, and the over-40 release timing rules (21/45-day consideration, 7-day revocation under the ADEA).
Dispute resolution
Arbitration clauses are common and mostly enforceable — but federal law (EFAA) lets employees take sexual-harassment and assault claims to court regardless of the clause. Class waivers and fee allocation deserve deliberate choices, not boilerplate.
Key U.S. employment terms and thresholds (2026)
| Item | Standard / threshold | Notes |
|---|---|---|
| Employment status | At-will | All states except Montana |
| Exempt salary floor (federal) | ≈$58,656/yr | Litigation ongoing; states higher |
| Overtime (non-exempt) | 1.5× after 40 hrs/wk | Daily OT in CA and others |
| Non-compete bans | CA, MN, OK, ND | Salary thresholds elsewhere |
| Non-solicit duration | 12 – 24 months | Customers and employees |
| Severance norm (when offered) | 2 – 4 wks/yr of service | Exchanged for a release |
| ADEA release window (40+) | 21/45 days + 7-day revoke | Group terminations: 45 |
Employment law layers federal, state, and city rules — salary floors, paid-leave mandates, final-pay timing, and covenant enforceability all vary by state and change frequently. Have offers above routine complexity reviewed by employment counsel.
How employment contracts work in practice
The standard professional hire
An exempt, at-will hire with salary, target bonus, and benefits. The contract's quiet work: preserving at-will status while making the compensation promises precise (what the bonus formula actually commits to, when raises are reviewed), assigning IP with the state carve-out, including the DTSA notice in the confidentiality clause, and skipping the non-compete in favor of non-solicitation — which protects the legitimate interests without the enforceability fight. The offer letter and the contract should match; courts read them together when they conflict.
The executive agreement
Senior hires invert the defaults: fixed terms or enhanced severance replace bare at-will, 'good reason' resignation triggers (demotion, pay cut, relocation) are negotiated alongside 'cause' definitions, equity acceleration on change of control gets its own section, and the restrictive covenants are individually bargained — and individually compensated, which is what makes them enforceable in skeptical states. The 280G golden-parachute tax analysis and clawback policies (mandatory for public-company executives) enter at this level too.
Fixed-term and contract-to-hire arrangements
A genuine fixed term ('employment through December 31') displaces at-will: ending it early without cause is breach, with the remaining term as the measure of damages — which is why employers who write term language casually regret it. Used deliberately — project roles, visa-linked hires, interim executives — the term contract should define early-exit rights for both sides, renewal mechanics, and what happens at expiry (automatic conversion to at-will is the common landing).
Mistakes that weaken a employment contract
Accidentally promising term employment
'Your annual salary' is fine; 'we're hiring you for a year at...' may be a one-year contract. At-will language plus careful phrasing elsewhere keeps the default intact.
Classifying by title instead of duties
'Manager' on the badge doesn't make a role exempt — the FLSA duties tests and salary floor do. Misclassification claims run back two to three years with liquidated damages doubled.
Using a non-compete everywhere
Void in California and several states, salary-gated in others, and under federal attack — a blanket non-compete is increasingly a liability that taints the agreement. Non-solicitation does the legitimate work.
An IP clause without the statutory carve-out
States like California void over-broad invention assignment and require notice of the statutory exemption. The missing carve-out can unwind exactly the assignment the company cared most about.
Severance without a compliant release
Paying severance without a release buys nothing; a release from an over-40 employee without the ADEA's 21/45-day-plus-revocation mechanics doesn't release the age claim. The exchange has rules — follow them.
How to use this template
- 01
Download the employment contract template in Word or PDF.
- 02
Fill in the role, reporting, location, and at-will status.
- 03
Set compensation precisely: salary, bonus formula or discretion, equity by plan reference.
- 04
Classify the role under the FLSA honestly and state it.
- 05
Add confidentiality with the DTSA notice, IP assignment with your state's carve-out, and right-sized covenants.
- 06
Set termination, final-pay, and any severance terms, then have both parties sign before the start date.
Skip this template if…
- Engaging independent contractors — deliverable-based, non-employee work runs on an independent contractor agreement with classification-safe terms.
- Hiring outside the U.S. — foreign jurisdictions mandate terms (notice, severance, working time) that U.S. templates don't carry; use local counsel or an EOR.
FAQs
What does at-will employment mean?
Either party may end the employment at any time, for any lawful reason, with or without notice — the default in every U.S. state except Montana. Contracts preserve it deliberately; fixed-term language, 'cause-only' termination promises, or careless phrasing can displace it and create breach damages.
What should an employment contract include?
Role and duties, at-will status, compensation (salary, bonus terms, equity), FLSA classification, benefits and PTO by plan reference, confidentiality with the DTSA notice, IP assignment with state carve-outs, any restrictive covenants, and termination/severance mechanics including final-pay timing.
Are non-compete agreements enforceable?
Increasingly, no: California, Minnesota, Oklahoma, and North Dakota ban them for employees; states like Washington, Colorado, and Illinois gate them behind salary thresholds; and the FTC has pursued a national ban through rulemaking and enforcement. Non-solicitation clauses (customers, employees, 12–24 months) remain the broadly enforceable alternative.
What's the difference between exempt and non-exempt?
Non-exempt employees earn overtime at 1.5× after 40 hours a week (daily overtime in some states); exempt employees don't — but exemption requires both a salary floor (≈$58,656 federally under the 2024–25 rulemaking, higher in several states) and a genuine executive, administrative, or professional duties test. Duties decide it; titles don't.
Does an employer have to give severance?
No U.S. law requires severance for ordinary terminations — it's a contract matter. When offered, the norm runs 2–4 weeks per year of service exchanged for a release of claims, and releases from employees 40+ must follow the ADEA's consideration and revocation timing to release age claims.
Who owns what an employee creates?
Work within the scope of employment belongs to the employer under work-for-hire doctrine, and a written IP assignment extends that to inventions — but several states (notably California) void assignment of inventions made on personal time, without company resources, outside the company's business. The clause must carry the statutory carve-out where required.
Employment Contract Template requirements by state
State law fills in this template's blanks — deadlines, caps, and enforceability rules differ meaningfully across state lines. Pick your state for the specific rules:
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