At Castronovo & McKinney, LLC, we have extensive experience drafting employee contracts.
These contracts, also known as employment agreements, clarify the relationship between the employer and the employee and spell out the rights and responsibilities of both parties
While employment agreements can help to minimize the risk of employment-related disputes, a poorly drafted employee contract can expose both parties to liabilities. Because companies in New Jersey often require new hires to sign employee contracts, it is crucial to understand any agreement presented to you during the hiring process.
Whether you need assistance reviewing, negotiating, or drafting an employee contract, our experienced employment lawyers can help. Contact our office today for a consultation.
What is an employee contract?
This is an agreement entered into during the hiring or renewal process that establishes the terms of your employment relationship. All types of businesses use employee contracts to help both parties understand their obligations during the course of a new hire’s employment. An employee contract typically covers:
- Compensation
- Duration of employment
- Employee responsibilities
- Employment benefits (e.g. health insurance, retirement plans)
- Commission/bonuses
- Profit-sharing/stock options
- Paid time off (PTO) policy
- Sick leave policy
- Noncompete provisions
- Nondisclosure provisions
- Method of dispute resolution (e.g. arbitration)
- Grounds for termination
Employee contracts cover both W-2 and 1099 employees and are typically used for high-level managers, freelancers, and independent contractors. Although these agreements are usually formally written documents both parties sign, employee contracts can also be implied through employee handbooks or policies adopted while an employee is working for an employer. More often than not, employee contracts are drafted by attorneys who have knowledge of applicable employment laws.
Types of Employee Contracts
The type of contract you will be asked to sign depends on factors such as your status as an employee, the organization’s needs, and the type of work you will be performing. Our employment lawyers regularly draft all types of employee contracts, such as:
Full-Time Employee Contracts
As the name implies, full-time contacts are used for permanent employees who work full time, usually 35 hours or more each workweek. Full-time contracts are typically written contracts that cover salary, benefits, paid holidays, vacation time, sick pay, and benefits, as well as workplace perks and professional development opportunities.
Part-Time Employee Contracts
Part-time contracts are offered to employees who work fewer hours than full-time employees, usually less than 35 hours per week. Part-time contracts include some of the same provisions as full-time contracts, except for information about insurance, salary, or PTO since these benefits are reserved for full-time employees.
Freelance
Freelance contracts are typically offered to employees hired to complete specific projects, such as designing websites, writing articles, or taking photographs. Freelance contracts spell out the limitations on hours, project details, compensation, and payment terms. These contracts are intended to protect freelancers from not being paid, receiving late payments, and from any project-related delays that may arise. Because freelancers are considered self-employed, freelance contracts do not include information about insurance, PTO, and other employment benefits.
Union Contracts
Union contracts are collective bargaining agreements offered to those who join a local or national labor union. These contracts are designed for employees of specific trades who may work directly for the union or may be contracted to work for a private company. While a private company may be paying their salary, a union contract provides other items and outlines job descriptions, duties, vacation time, PTO, benefits, and pension details. Union contracts are specifically intended to protect the rights of union workers.
Executive Contracts
Companies that hire high-profile executives for upper-level managers often extend executive contracts. These contracts are similar to full-time contracts but also specify traditional benefits and protections afforded to executive employees, as well as special incentives, such as high salaries, severance packages, and perks like a company car. Executive contracts typically have specific confidentiality and non-compete provisions.
Difference Between Offer Letters And Employee Contracts
In addition to drafting employee contracts, we also prepare offer letters that contain basic terms, such as
- Title
- Compensation
- Benefits
- Paid time off
- Relationship reporting
Offer letters are provided to prospective employees whereas employee contracts are extended to new hires. Notably, an offer letter is not legally binding.
Pros and Cons of Employees’ Contracts
Employee contracts typically favor employers and give them more control over how employers perform their work. They also help protect confidential business information and give employers discretion in terminating employees who do not meet performance standards. At the same time, they can impose obligations on employers as well and they can be held liable for acting in bad faith or breaching the contract.
Contact An Experienced New Jersey Employee Contracts Attorney
If you need assistance reviewing or drafting employee contracts, turn to Castronovo & McKinney. We will provide you with informed representation and work to protect your interests. Contact our office today to get started.