COVID-19 Update: How We Are Serving and Protecting Our Clients

What to Include in a Sacramento Employment Contract

August 14, 2012

When clients come into a Sacramento business law office for advice on how to start and maintain a new business venture, a significant portion of the conversation often turns to how to manage employees. In most cases, small businesses tend to hire employees "at-will." At-will employment is the most flexible form of employment for both the employer and employee, as either party can terminate the employment relationship at any time. Further, the employee can terminate the relationship for any reason, while the employer can terminate the relationship for almost any reason, as long as the reason is not discriminatory or otherwise illegal.

In some limited cases, however, small businesses may benefit from creating more formal employment relationships with their employees. This type of employment is called "contract employment," and it can help both the employer and employee understand precisely what each other's rights are when it comes to the employment. An employment contract can include whatever provisions the employer and employee want to include, but below are some provisions typically found in most employment contracts.

First and foremost, employment contracts must include the start date and duration of the employment. The duration may be unknown to either party at the time the contract is made, which is fine. In place of a known end date, the parties may agree to such language as "indefinitely" or something similar. Some other mandatory things to include are salary and benefits. The salary clause must specify whether the employee's compensation is hourly, weekly, monthly, or yearly. The agreement may also need to include alternate forms of earnings, such as profit sharing or stock options. The benefits portion should include the methods of calculating how benefits are to be paid, including future adjustments to account for inflation or cost of living.

Many employers prefer to list specific duties of the employee in the employment contract. While in most cases, employees are tasked with whatever duties arise in the course of business, some businesses prefer to have one employee's duties segregated from another's duties. This may be for reasons of business efficiency, accounting, or other internal controls. Whatever the reason, if the employee's authorities or duties should be limited, it should be spelled out in the contract.

Employment contracts often contain more complex terms. These include confidentiality agreements and non-competition clauses. Confidentiality agreements are designed so that the employee does not leak business secrets to competitors or the public. Non-compete clauses are designed to prevent the employee from seeking employment at a competing company, or from starting a substantially similar company. A Sacramento small business lawyer can be an invaluable ally in drafting these clauses.

Federal and state laws sometimes prohibit confidentiality agreements and non-compete clauses that are excessive in scope or duration. Your lawyer can help interpret these laws so that you can craft an employment agreement that fully advances your business model without unreasonably burdening the rights of your employees. If you think your business would benefit from creating employment contracts with your employees, consider contacting a Sacramento business attorney for a consultation.

Client Reviews
★★★★★
Kristina Reed handled the legal work of creating a corporation for my photography business in the state of California. She was extremely professional to work with and very prompt in her response times. She explained everything in language I could understand and helped me navigate the process smoothly from start to finish. I was very happy with her services and will definitely return to her for any future needs! Amy W.
★★★★★
As the co-owner of a small business, the process of selling assets was overwhelming. It was great to have [Kristina Reed's] advice throughout every step of a very demanding and hectic process. We were very pleased with [Kristina Reed's] class, focus and approachability. [Kristina Reed] always acted as a valued associate to the company and became a reliable advisor. Furthermore, we thank [Kristina Reed] for [her] calm encouragement when it was most needed would recommend [her] expertise unequivocally. Todd S.
★★★★★
I reached out to Kristina to assist with drafting some contractual real estate paperwork, and was not disappointed. She provided a prompt response and was very helpful in accommodating my request. Her expertise ensured a thorough conclusion. I would gladly recommend Kristina to other individuals needing real estate expertise. Stephen R.
★★★★★
I'm extremely impressed with my experience with Kristina Reed. I used her services to negotiate a commercial lease in Folsom. Our agent had actually recommended a few attorneys to us but we didn't feel comfortable with any of them. I was very impressed with Kristina on our first conversation. The landlord group was one of the hardest you can find to deal with. There were lots of going back and forth but Kristina's knowledge and experience made my life very easy. She was always quick to get back to us whenever we have questions. She pointed out issues on my lease that my previous lawyer totally missed. I recommend Kristina's services to everyone I know. My friend just used Kristina's services for his lease negotiation in Davis and he was very impressed as well. Devin B.