1. Job information.
  • Key information regarding the employee’s role at the company should be the first thing included in any employment contract. This should include the job title, direct supervisor/team reporting to them, and an explanation on how performance will be evaluated.


  1. Compensation.
  • The compensation package should be outlined in detail. This should include salary, bonuses, incentives, and information on when and how raises are determined.


  1. Benefits.
  • Benefits are not always required but if you decide to provide them make sure to specify the specific benefits provided, such as medical, dental, eye care, life insurance, etc. and what percent the employer pays and what percent the employee pays.
    • Also include information about the 401(k) plan, stock options, and any fringe benefits if offered.


  1. Time off, sick days, and vacation policy.
  • Include a detailed account of the time off and vacation policy. Include information about how many paid vacation days are accrued per pay period, whether vacation days increase with long tenure, and explain your expectations regarding sick days, family emergencies, or unpaid leave.


  1. Employee classification.
  • Define whether the new hire is an employee or contractor to ensure tax and insurance compliance.
  • Avoid misclassifying your employee as a contractor. Generally speaking, if you are controlling when, where, and how the employee works, they cannot be a contractor. Penalties are harsh for employee misclassification.


  1. The schedule and employment period.
  • The contract should include whether the employee is expected to work certain hours and what those hours are.


  1. Confidentiality agreement.
  • Protect sensitive information like business trade secrets and client data by having the employee sign a confidentiality agreement within the contract.


  1. A technology privacy policy.
  • Clarify what is acceptable regarding the use of social media and email on company property. If you don’t want employees saying anything negative about work on social media, include it in your employment contract or employee handbook.


  1. Termination terms and conditions.
  • Explain what is required for either party to terminate the relationship, including the amount of notice required and if it should be written.


  1. Requirements after termination.
  • The contract should include any restrictions or mandates on an employee after leaving the organization. For example, including a non-solicitation or non-circumvention policy can help protect your business and its clients. Remember, when it comes to employees that non-compete agreements are per se invalid in California, so use such provisions sparingly.

Creating a Capitalization Table

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