It is never a good idea to draft an employment contract using a template that you found on the Internet. Every employment arrangement is unique, and subtle drafting mistakes could result in serious consequences that are difficult to foresee without the benefit of legal training. Nevertheless, most employment contracts have certain basic features in common. Some of these are listed below.

Employee’s Duties: This section should clearly describe the position and what is expected of the employee. If you have published an Employee Handbook that includes work rules (and you definitely should have), you can refer them to this section rather than putting them all in the contract.

Employer’s Duties: This section should include a listing of the support the employer will provide (a personal computer, work tools, etc.). You should also list the expenses for which the employer will compensate the employee (work-related travel, for instance) as well as general employer duties.

Contract Term: Employment can be at-will (until the employee is fired or quits) for a fixed term (one year, for example) or until the completion of a particular project.

Events of Termination: Which events will automatically terminate the contract? You should list certain offenses for which the employee can be immediately terminated as well as other termination events such as mutual agreement, company bankruptcy, etc.

Compensation and Benefits: List the employee’s salary, bonuses, disability benefits, death benefits, insurance, severance pay, company automobile, etc., as well as the terms and conditions that apply to these benefits (how the employee qualifies for a bonus, for example).

Confidentiality: This clause should be drafted with particular care if the employee will have access to company trade secrets. It is usually OK to define all work-related information as “confidential.”

Intellectual Property: Intellectual property might not matter much if you are hiring a cake decorator, but it will be critical if you are hiring a software engineer. Be sure to include a clause defining all employee-generated intellectual property as “works for hire” so that the employee cannot claim ownership of, say, a software source code.

Damages for Breach: Damages for breach of an employment contract are fixed by California law even in the absence of an employment contract. You could, however, include a carefully drafted liquidated damages clause, especially with respect to intellectual property infringement.  

Dispute Resolution: In the event of a dispute, must the parties attempt negotiation first? If negotiations fail, do they go to court or to arbitration? All of this should be settled in a clearly-worded dispute resolution clause.

Boilerplate: Severability, survival, merger, force majeure, and similar clauses that appear in most business contracts are almost always necessary. These sections may look like meaningless “legalese,” but they are frequently of critical importance once a dispute erupts. Don’t use a template – have a lawyer draft these clauses for you.

Do not include a non-compete clause that binds the employee’s choice of employers after the termination of employment. This is because California does not enforce non-compete clauses except under very limited circumstances. Including a non-compete clause and failing to include a severance clause could result in invalidation of the entire agreement during a dispute.

Contacting Us Now Could Save You a Lot of Trouble Later

A poorly drafted employment contract is like a time bomb waiting to go off – except that the fuse can burn for years before an explosion occurs. If you need help drafting an employment contract or resolving an employment dispute, call CKB Vienna today or fill out our online contact form to schedule a consultation. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.