Employment Agreement Template — What to Include
Hiring your first employee is a milestone. It's also the moment when a handshake and a job offer letter stop being sufficient. An Employment Agreement sets the terms of the working relationship in writing — protecting your business, clarifying expectations, and giving your new hire a clear foundation from day one.
This guide covers what an Employment Agreement does, what it should include, and the mistakes that cost founders most when they skip it.
What Is an Employment Agreement?
An Employment Agreement is a binding contract between an employer and an employee that defines the terms of employment. It covers compensation, responsibilities, confidentiality, intellectual property, and how the relationship can end.
It is not the same as an offer letter, which is typically informal and non-binding on key terms. An Employment Agreement is the document you rely on if a dispute arises.
When Do You Need One?
You need an Employment Agreement any time you bring on a full-time or part-time employee, particularly when:
- The role involves access to confidential business information
- The employee will create intellectual property on behalf of the company
- Compensation includes equity, bonuses, or commission structures
- You want clearly defined grounds and process for termination
For early-stage companies, having employment agreements in place before your first hire is cleaner than trying to introduce them after the fact.
What Should an Employment Agreement Include?
1. Job Title and Responsibilities
Define the role, who the employee reports to, and the general scope of their duties. This doesn't need to be a full job description, but it should be specific enough to establish expectations.
2. Compensation and Benefits
Specify base salary, pay schedule, bonus eligibility, equity grants if applicable, and any benefits. Vague compensation terms are a common source of disputes.
3. Employment Classification and At-Will Status
Most U.S. employment is at-will, meaning either party can end the relationship at any time without cause. Your agreement should state this explicitly — and if there are exceptions (e.g., a fixed term), define them clearly.
4. Confidentiality
Employees will have access to sensitive information about your business. A confidentiality clause restricts what they can share during and after employment.
5. Intellectual Property Assignment
Any work created by an employee in the scope of their role belongs to the company — but spelling this out in the contract removes ambiguity. This is particularly important for technical roles where employees may create code, designs, or other protectable work.
6. Non-Solicitation
Restricts departing employees from recruiting your team or soliciting your customers for a defined period after leaving. Enforceability varies by state, but including the clause is better than omitting it.
7. Non-Compete (Where Enforceable)
Non-compete clauses are increasingly restricted — California bans them almost entirely, and the FTC has moved to limit their use nationally. Include only where enforceable and proportionate to the business interest.
8. Termination Provisions
Define notice periods, severance if applicable, and what happens to unvested equity or pending bonuses upon termination.
9. Governing Law
Specify which state's law applies, particularly important if you have remote employees in multiple states.
Common Mistakes Founders Make
Relying on the offer letter alone. Offer letters rarely cover IP assignment, confidentiality, or termination terms in sufficient detail. They are not a substitute for an Employment Agreement.
Missing the IP assignment clause. Without it, work your employee creates on company time in the course of their job may have cloudy ownership — a serious problem at due diligence.
Using a one-size-fits-all template. An agreement drafted for a sales hire may leave significant gaps for a technical employee or an executive with equity compensation.
Not updating agreements as roles evolve. If an employee's responsibilities, compensation, or equity changes materially, document it. An outdated agreement creates ambiguity.
Why This Matters More for Early-Stage Founders
Employment disputes are one of the most common sources of litigation for early-stage companies. Clear documentation of the employment relationship — compensation, IP ownership, confidentiality, and termination terms — is your first line of defense.
Investors also review employment agreements during diligence. Clean, consistent documentation across your team signals operational maturity.
Get a Lawyer-Drafted Contract Without the Lawyer Bill
Having an attorney draft an Employment Agreement from scratch typically costs $1,000–$2,500 depending on complexity. TalkingTree gives you the same quality without the invoice.
TalkingTree's Employment Agreement template was built by experienced business attorneys and is available through the Contract Studio. Customize it to your hire, fill it out, and send it for signature — all in one platform.
- Business membership ($59.99/mo): Full access to the Contract Studio and a library of 100+ attorney-drafted templates, plus limited e-signature included. One contract alone covers the cost of your first month.
- Enterprise membership ($149.99/mo): Everything in Business, plus unlimited e-signature — built for founders and teams managing a high volume of contracts.
TalkingTree is a 501(c)(3) nonprofit. Your membership is tax-deductible, and every dollar supports making professional legal tools accessible to entrepreneurs who need them most.
Get started with TalkingTree and get access to attorney-drafted contracts, a built-in signing workflow, and legal tools designed to help your business operate with confidence.
This page is for informational purposes only and does not constitute legal advice. For advice specific to your situation, consult a licensed attorney.